Is Dividend Growth Investing Doomed?

I love cake. I live a quarter mile from a cake specialty dessert shop and I frequent way more than I should. The only problem with buying a single slice is that I don’t have any left when midnight cravings strike. I can’t have my cake and eat it too.

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With dividend growth investing, investors are attempting to achieve just that. First, we’re immediately receiving payment(s) each year through the current dividend. Plus, we receive a COLA or a dividend raise that generally bests inflation depending on the security. What’s not to like? What more can a long-term buy and hold investor ask for?
Call me a skeptic, but I embraced dividend growth investing tepidly since I am wary of the sustainability of the model. When something seems too good to be true, it usually is. Nevertheless, how can I not be impelled to focus on the Dividend Aristocrats, champions, and challengers that reward long-term shareholders with rising dividends each year? These are the stalwarts where compound interest flexes its muscles and demonstrates its superiority.
Let’s take a look at both sides to see the potential pitfalls and benefits from dividend growth investing.
5 Benefits of DGI 1. It keeps management hungry.
Promising shareholders that dividends will rise each year signals to management that they must grow the business each year. When revenues and net income start to drop, it becomes much more challenging to increase dividends since... Read more