A New Tool For Dividend Growth Investors

How do you systematically take your dividend growth investing to the next level? Perhaps the initial appeal of dividend growth investing was its beautiful simplicity of buying stocks where the dividend grows annually. This allows you the freedom of focusing on an increasing and stable dividend stream - which is likely the key consideration of your retirement - while shrugging off capital price corrections in the market.
But when it actually comes to choosing which dividend growth stocks to buy - where do you start?
Of course, you may be inclined to use the awesome Seeking Alpha ETF Screener to discover a variety of dividend growth ETFs ranging from iShares Core Dividend Growth (DGRO) to the popular Vanguard Dividend Appreciation fund (VIG).
Yet many other DIY investors prefer to carefully handpick their investments. But where do you start and when does it end?
Common Sense Factor Analysis? Some dividend growth investors choose stocks based on factors that make sense to them. One popular factor is the 5-year trailing dividend growth rate. Common sense tells you that if big growth continues, you will have the largest income stream.
But does this common-sense approach really work? Not so far. Why?
Perhaps the exceptionally high dividend growth is a short-term anomaly Maybe high trailing dividend growth inadvertently focuses on smaller and newer companies which are higher risk This article from 2 years ago looks at various common factors and their interaction with... Read more