Dividend Growth Investors, Wake Up!

It confounds me that while dividend growth investors are typically small retail investors that could easily buy smaller stocks (which historically outperform), they instead focus on the largest, most well-known and efficiently-priced stocks in the market. It further confounds me that dividend growth investors seem relatively valuation indifferent.
Dividends are great as a return of capital and I have warmed up to them relative to share repurchases over the last few years, but they are not the most important thing. The most important thing is long-term total returns. And a few of the most important determinants of those returns are the size the company whose stock you are buying and the price you pay for those shares.
Characteristics of the DGI Lot
Dividend Growth Investors are small retail investors generally managing less than $1mm of personal assets. They do not invest full-time but are interested and passionate and 'invest' sufficient time in their portfolio. Presumably they like control and involvement, making passive strategies unappealing to them. They enjoy the investing process: learning about companies, reading the news, and making money work for them. The process is fun and exciting.
As far as what they invest in, they seem to focus on companies that pay dividends, preferably those that are increasing their dividends. For some reason, dividend growth investors also seem attracted to large and mega cap stocks. A few that seem very popular among the... Read more