Yield and Dividend Growth

This is what most dividend growth investors do with stocks. We search out a generous 4-5% yield and buy companies when they are attractively priced.

Next, look for a steady upward growth record in that dividend that will give you some sort of an idea where your stock will be headed based on what it has done in the past 5 or 10 year period.

In a recent article by John Heinzl he lamented that since he started his new dividend growth portfolio in Sept. 2017 the portfolio was down in value 2.1% but that the dividend payout grew by 4.8%.

Would you be happy that when you looked at your money and found out that you had less there  than you had 6 months ago? I know that would crush most people.

As a retiree I just focus on that dividend and in the Yield Hog's case that part of the income stream is growing nicely. Safety is also important. The dividends are growing safely and should continue to stay well ahead of inflation.

It's not sexy and not for everyone and is just one strategy. I do find buying big blue chip companies that have been around for decades works for me. Let's look at some and what they yield and how they have grown;

Enbridge - 7.1 % yield, 10 yr Dividend Growth 14.6%
BCE - 5.6% yield  10 yr. DG - 7.1%
EMA - 5.6% yield 10 yr. DG -  9%
TRP - 5% yield, 10 yr. DG - 6.2%
CIBC - 4.8% yield 10 yr. DG - 5%
SJR.B - 4.4% yield 10 yr. DG - 7.6%

These are just some of the large cap highest yielding stocks right now with, added in 10 year dividend growth records. 

It also represents a nice mix of a bank, utility, telco and energy infrastructure. The longer you hold these types of companies the higher your yield will go up as you collect those dividends and realize that growth.

Ten years is an excellent holding period and also a good indicator on what the expected return will be in the future, but no guarantee.

From the above example you can expect BCE to return 12.7% a year every year that you own it. Y + DG = Total Return.

This is what I have learned about safety, diversification and asset allocation. Pick just a few stocks and look out long term. No need to buy baskets you know nothing about. I own all of the stocks above and consider them a great starting point for starting a new portfolio. Another good practice I like to use is, ask yourself, "will the stock I just bought today, be higher or lower in price in 10 years?"

In the short term none of these down days really matters.

If all of this stock picking isn't for you, maybe it's best to stick with a balanced portfolio like the one proposed here. 

"I don't want a lot of good investments. I want a few outstanding ones."
- Philip Fisher - Common Stocks and Uncommon Profits.

Growth is the key, so to win we must focus on that. DO NOT and never let these day to day price fluctuations get to you. Hold to receive that 10 year DG record.

Related Post: Dividends Power Portfolio Returns

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