Dividend Growth Investing, Retirement Income, Stock Market Investing

What Makes Dividend Growth Investing Work Best?

In my previous post, I closed by listing some 24 stocks that exhibit some of the very best 10-year, look-back lines for the “analysts’ consensus of forward-looking earnings estimates.” These estimates are for what a company is expected to earn 12 months out. Analysts also publish their opinions as to what they believe corporate earnings growth will be beyond 12 months, for the next 1 to 3 years out. I’m looking for the smoothest upwardly trending lines that exhibit consistent, reasonable and sustainable earnings income growth. That growth should be a number right in the teens. There’s nothing better than 13 to 17% consistent growth. Any company doing this must have incredible management, a great business model, and must be in charge of its own financial destiny, as it would appear to be relatively unmoved by macro-economic circumstances, exhibiting the least economic sensitivity. Conducting that same search again today, that list would contain the following issues, as it is possible to run the search and examine the EPS charts in a matter of mere minutes everyday. At any given time, there might be a few more, or a few less, or some different issues. The reason is simply that selecting something on the basis of appearance always has a bit of personal subjectivity to it… but starting with these 27: JNJ, ORCL, DIS, CMCSA, QCOM, NVO, UNP, CVS, WAG, NKE, BLK, CNI, TJX, ECL, PPG, VFC, ABC, ROST, HRL, BAP, NTES, CHD, PII, OII, OTEX, QCOR and JKHY, one could create a tremendous portfolio.

But, the strategy is about dividend growth. The second step is to graph the 10-year dividend payout of these prospects, in order to find those that raise their dividend annually at a rate that is very much in keeping with their earnings growth… in the teens, and at a rate that isn’t taking any more than 40% of their earnings and returning them to shareholders, but retain at least 60% of their earnings for R&D and marketing, or, in short, for the purpose of further growing their business. These companies are in the very top 10%, the top decile, for dividend safety and security. These are the very safest-dividend growers. These are the best stock market investments!

From out of the above list of prospective candidates, those exhibiting the very finest dividend payout lines, which also grow in the teens annually, and result in at least a tripling of one’s dividend income over the past decade, are these 20 beauties right here: DIS, CMCSA, QCOM, UNP, CVS, WAG, NKE, BLK, CNI, TJX, ECL, VFC, ABC, ROST, HRL, CHD, PII, OII, QCOR and JKHY. These are something special… but, there’s more. The stock selection process isn’t quite done yet. Come on back.

Here’s to your investing success!
Harold F Crowell

I should probably add that from out of the above, I own: CMCSA, QCOM, UNP, CVS, BLK, CNI, TJX, ECL, VFC, ABC, ROST, HRL and CHD. And, I’m seriously contemplating adding OII, and maybe, JKHY. Do your own homework, and make your own decisions, for your own reasons.


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