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Dividend Investing: How Many Years of Dividend Growth is Enough?

Dividend Investing: How Many Years of Dividend Growth is Enough?
(Dollar Photo Club)

By Tuesday, 23 February 2016 08:35 AM Current | Bio | Archive


I gave my thoughts on dividend investing to CNBC’s Constance Gustke. You can read the full article here, and an excerpt is below:

    Does the length of years a stock has been paying dividends, and maybe increasing them, matter in selecting a dividend investment?

    Reliability of cash flow and dividends over a number of years is essential, but how many years, exactly? This could be the most important question when it comes to choosing a dividend ETF, specifically.

    Sizemore said S&P Dividend Aristocrats Index is 25 years, the basis for the PowerShares NOBL ETF, and only includes stocks with a 25-year history of raising dividends. While that means the dividends are “close to bulletproof,” the downside is, you don’t get the tech-sector names like Apple or even Microsoft, which have emerged as some of the fastest-growing dividend payers.

    “You’re getting a core of old consumer staples and old industrials that have been around forever,” Sizemore said. “It’s not bad, but those stocks are kind of expensive.” In his view, with the stock market in the latter stages of a bull market run, sectors like consumer staples aren’t trading at prices that Sizemore sees as being a good entry point. “I don’t want to overload on these sectors,” he added. “They won’t have to cut dividends, but the problem is, the stock prices aren’t that compelling.”

    Overall, “10 years is a nice round number,” Sizemore said. “As an investor, you can figure that in any 10-year window, the companies have seen at least one recession. Clearly, it takes a high-quality company with substantial staying power and cash flow to generate and grow a dividend over 25 years, but what an investor also might miss out on is emerging dividend players.”

Charles Lewis Sizemore, CFA, is chief investment officer of the investment firm Sizemore Capital Management and the author of the Sizemore Insights blog. As of this writing, he was long AAPL and MSFT. To read more of his work, CLICK HERE NOW.

Disclaimers: If I mention a stock favorably, you should assume that I have a position in it, both personally and in client accounts.  This does not, however, automatically mean that you should own it. I am expressing my opinions in this newsletter, not offering individualized financial advice or soliciting you to buy securities.  See full disclaimer here.

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CharlesSizemore
Does the length of years a stock has been paying dividends, and maybe increasing them, matter in selecting a dividend investment?
dividend, investing, stock, years
388
2016-35-23
Tuesday, 23 February 2016 08:35 AM
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