Assessing Long-Term Performance Of Dividend Growth Investing And A Call To Action
Published Oct 2, 2020 on Seeking Alpha

Seeking AlphaPortfolio StrategyAssessing Long-Term Performance Of Dividend Growth Investing And A Call To ActionOct. 2, 2020 4:07 PM ET|| Includes: ADBE, AMZN, DGRO, FB, GOOG, GOOGL, MA, MSFT, NFLX, PYPL, UNH, VIGby: The Long-windedThe Long-winded Growth, long-term horizon, portfolio strategy, large-capSummaryThe dividend growth investing has been all the rage in the last decade and for good reasons.
Investing in profitable companies with proven ability to raise earnings and dividends for the foreseeable future should continue to reward investors.
Having said that, the investing style has been underperforming the S&P 500 over the last decade.
The article uncovers the primary reason for the underperformance and aims to provide strategy/ideas to bridge the gap.
I have always been intrigued by dividend growth investing. The philosophy of the investing style makes absolute sense. The whole concept revolves around identifying companies that pay dividends and raise them over time. There are a number of key benefits of shortlisting the companies that meet these criteria. So, let's look at the first principles of the investing style:
These companies are profitable enough (after paying interest and taxes) that they can share some of the earnings with investors These organizations are confident in their ability to grow earnings over time as they have been continuing to raise their dividends With the virtue of compounding, one day these dividends should be enough to provide comfortable income in retirement All this sounds amazing. So, considering all the merits, I thought why not start by looking at a solid dividend growth ETF, and luckily Vanguard has something perfect called Vanguard Dividend Appreciation ETF (VIG). By the way, if you are a fan of BlackRock/iShares, you can look at iShares Core Dividend Growth ETF (DGRO), and I like the acronym DGRO - you have to love these BlackRock folks, their marketing team seems to know what they are doing. Anyways, for now,... Read more