2 Tips For Mega-Cap Dividend Growth Investing

If you have read any of my articles on dividend growth investing, you will quickly see my preference towards smaller-sized stocks. The long-term return of these pint-sized titans has historically been more - whether you prefer to measure just income, or dividends and capital gains combined.
Yet, there are many reasons why someone might prefer to invest in large-cap dividend growth stocks. Here are just a few reasons why you might lean towards the large status despite less historical return:
Mature companies with strong balance sheets High liquidity means less market impact when trading Long track record of earnings stability Often a well-known brand More analyst coverage For these reasons, I wanted to present 2 simple ideas that could improve your dividend growth selection if you show a preference for large and liquid blue-chip companies.
Tip #1: Sector Weighting
This may seem like a very obvious tip, but sometimes the most obvious modification is overlooked. Many dividend growth investors do not employ tactical allocation in that they don’t make short-term sector bets. Dividend growth investing typically focuses on long-term objectives. As such, you might do well to balance out your sector weights, as it is difficult to say which sector will do best over the next 10 to 20 years. In addition to this, it is also hard to tell which sector will fall the hardest in the next bear market. Putting too many eggs in one basket can lead to some undesired volatility... Read more