The 5-Year Rule in Dividend Growth Investing

This is the fourth in an occasional series about my public Dividend Growth Portfolio. The portfolio is designed to demonstrate how dividend-growth investing works. The first three articles were: Portfolio Forensics (August 31, 2010), Watching Dividends Rise: Putting Together a Focused Dividend-Growth Portfolio (February 1, 2011), Road Map for Managing a Dividend Growth Portfolio (February 23, 2011). In this article, I want to expand on a particular element of my strategy for picking dividend-growth stocks: The 5-year rule. The rule simply says that a company must have raised its dividend for at least 5 consecutive years before it is eligible to be purchased for the Dividend Growth Portfolio.The thinking is straightforward. Since the goal is reliable dividend growth, I want to select companies that grow their dividends reliably. Of course, no one can predict the future. Any company can cut, freeze, or eliminate its dividend at any time. But... Read more