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News

The Facts Are In: Dividend Growth Is Key

Aaron Levitt Nov 19, 2017


Just as there are many different types of investors, there are also many different types of investment styles.

And it seems that everyone is battling it out to see who is right or wrong. To be honest, most systems or styles – value, growth, momentum, etc. – will work. The thing is, they won’t work all the time. Sometimes value will reign supreme; other times, it might be growth stocks.

But one style that doesn’t seem to ever go out of fashion is dividend-growth investing.

Buying firms for dividends or a share of their profits is what stock ownership was originally about. And as it turns out, buying shares of companies that continually increase their payouts overtime is a great way to build wealth over the long term. In fact, it’s been the single biggest driver of returns for the market.

For investors, the evidence is clear: dividend growth is the key way to win.

Use the Dividend Screener to find high-quality dividend stocks. You can even screen stocks with DARS ratings above a certain threshold.

Growth vs. Yield

From the very early days of stock ownership – we’re talking the Dutch East India Company days – dividends or receiving a piece of a firm’s profits were essential pieces of the puzzle. This has held true for most of the market’s history. Buying shares of a company for its dividend was really the only reason to own stock. This didn’t change until the 1970s/80s when capital appreciation and gains began to be the top drawers for investors. And thanks to the rise of day trading, hedge funds and the dot-com days, dividends are seen as an afterthought for most investors.

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