Are Dividend Champion Growth Rates Indicative Of Future Outperformance?

Are Dividend Champion growth rates indicative of future outperformance? To answer this question, I computed year-over-year (YoY) dividend growth rates for all stocks currently listed in the US Dividend Champions list from 1997 to 2009 (see list here ). For each year from 1997 to 2009, the sub-group of Dividend Champion stocks with the dividend growth rates (DGRs) greater than or equal to 15% were identified, and their subsequent two-year total returns were computed. Because it is possible to have large DGRs for stocks with low yield (i.e. dividing by a small denominator), only stocks with yields >= 1% had their DGRs computed. All dividend data was pulled from Yahoo Finance, and all stock price data was pulled from Google Finance. Yahoo does not automatically adjust their stock prices for stock splits, but they do adjust their dividend data. As a benchmark, the performance of these Dividend Champion stocks were... Read more