Dividend Growth Investing in 2019

Dividend Growth Investing | Sheaff Brock | Time and Money

Dividend Growth Investing in 2019

The new film release, “What Men Want,” is designed to recapture the box office success of the blockbuster Hollywood romantic fantasy of nineteen years ago, “What Women Want.” An investment-world equivalent might attempt to answer the question of “What Investors Want.” It appears the answer is asylum-with-growth-potential, given the tumultuous investment markets which marked the final weeks of the past year.

Dividend growth investing, as seekingalpha.com explains, involves the researching and careful selection of high-quality companies that are capable of growing profits for extended periods of time and that pay shareholders sustainable dividends that are regularly increased on an annual basis.

SimplySafeDividends.com lists several ways in which “being a dividend growth investor can help you reach your financial goals and make you a better long-term investor.” SimplySafeDividends.com lists several ways in which “being a dividend growth investor can help you reach your financial goals and make you a better long-term investor.”

  1. The historical importance of dividends to a portfolio’s total return (from 1930 to 2017, dividends accounted for 42% of the S&P 500 Index’s total return).
  2. Dividend growth stocks have outperformed the stock market over time.
  3. Embracing a dividend growth investor mindset can help you avoid the biggest cause of market underperformance—panic selling and buying. By focusing on long-term portfolio income and growing dividends, you are reminded of what matters in the long-term: cash flow.

Why is it, exactly, that some dividend-paying stocks offer much higher yields than others, SimplySafeDividends.com asks? There are several possible answers, the authors explain:

  • a high yield reflects a company’s mature status (think utilities and telecom companies)
  • some companies have unique business structures that require them to distribute cash flow to investors
  • some stocks use financial leverage to magnify profits.

With the flood of baby boomers entering retirement, Sheaff Brock Managing Director Dave Gilreath sees dividend growth investing in the form of blue chip dividend growth stocks “taking the baton from pure growth stocks in 2019.”

In fact, the primary objectives of the Sheaff Brock Dividend Growth & Income Portfolio Strategy are threefold:

  1. Identify and invest in individual stocks that have a history of paying dividends.
  2. Identify and invest in stocks that have a history and an outlook to increase their dividends.
  3. Identify and invest in stocks that have opportunity for capital appreciation.

No need to turn to Hollywood in an attempt to understand “what men want” or “what women want.” Instead, Sheaff Brock suggests heeding the caution of Warren Buffett: “Owners of stocks too often let the capricious and often irrational behavior of their fellow owners cause them to behave irrationally as well.”

Dividend growth investing is focused on what long-term investors really want—wealth-building and income that can grow over time.

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