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Can Focusing on ROIC Select Stronger Dividend Stocks?

Aaron Levitt Jul 25, 2019


Investors are always looking for an edge. We’re always looking for the next big thing or metric to focus on, in order to beat the market and find outperformance. This could help explain why there are so many styles of portfolio construction. This is true for dividend investing as well. Both dividend-growth and high-yield dividends are praised by their respective cohorts.

But there’s another metric and style dividend investors may want to focus on. We’re talking about looking at return on invested capital, or ROIC.

The metric is often ignored, but it turns out focusing on ROIC can be exactly what dividend investors need to find strong candidates for their portfolios. Moreover, the metric can signal the potential for future dividend growth, strong yields and overall outperformance. The best part is that this is one market trick that actually works. In the end, income seekers need to know ROIC.

Find out why now might not be the best time to dump your dividend stocks here.

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