Why Stocks With Growing Dividends?
DIVIDEND POLICY AS A SIGNAL
A company’s dividend policy is tangible evidence of its management’s confidence in future earnings growth.
DISCIPLINE IMPOSED BY DIVIDEND POLICY
The managements of companies that increase their dividend year-after-year need to take a disciplined approach when making capital allocation decisions to insure that earnings growth will support higher dividend payments.
The American population is aging rapidly. This growing section of the investing public typically favors income producing assets.
Current dividend yields are competitive compared to those available investing in fixed income securities.
RISING STREAM OF INCOME
Stocks with growing dividends provide a steady stream of income that rises over time.
The payment of a meaningful dividend adds to one’s confidence in the accuracy of a company’s financial statements.
Rising dividends can act as a hedge against inflation.
Dividends are an important component of stocks’ total return, having contributed over 40% since the mid-1920s.
Dividend stocks tend to be less volatile than non-dividend payers.