Dividend Growth Investing: Unleashing the Power of Consistent and Outperforming Stocks
Dividend growth investing is a time-honored strategy that focuses on buying, holding, and adding to companies with a proven track record of increasing their dividends year after year. This strategy not only offers a steady stream of passive income but also capital appreciation as these companies often outperform the broader market.
Top Performing Stocks
Based on the U.S. Dividend Champions spreadsheet and NASDAQ data, I’ve identified some top-performing dividend growth stocks. These companies have not only shown impressive dividend growth but also outperformance relevant to certain benchmarks.
- MPWR (Mid-America Power, Inc.): This utility company has increased its dividend for 12 consecutive years, with a dividend growth rate of approximately 7% per year. Its current yield is around 3.3%.
- STLD (Southwestern Energy Company): With a dividend growth rate of around 10% per year, this energy company has increased its dividend for nine consecutive years. Its current yield is around 1.7%.
- JPM (JPMorgan Chase & Co.): This financial services giant has increased its dividend for 15 consecutive years, with a dividend growth rate of approximately 13% per year. Its current yield is around 2.4%.
Top REITs
Real Estate Investment Trusts (REITs) can also be excellent additions to a dividend growth investor’s portfolio. Their primary goal is to generate income, making them natural dividend growers. Here are some top REITs with impressive returns and dividend growth rates:
- CTR (Columbia Property Trust, Inc.): This REIT, which focuses on office properties, has increased its dividend for 11 consecutive years, with a dividend growth rate of approximately 13% per year. Its current yield is around 3.2%.
- FR (Federal Realty Investment Trust): This REIT, which focuses on retail properties, has increased its dividend for 52 consecutive years, with a dividend growth rate of around 3% per year. Its current yield is around 2.8%.
- REXR (Real Estate Income Properties Trust, Inc.): This net-lease REIT has increased its dividend for 22 consecutive years, with a dividend growth rate of approximately 3% per year. Its current yield is around 4.3%.
Now, let’s discuss the potential impact of these dividend growth investments on an individual investor and the world at large.
Impact on Individual Investors
For an individual investor, investing in dividend growth stocks and REITs can provide a stable source of passive income. The consistent dividend growth not only increases the income generated but also serves as a hedge against inflation. Moreover, the capital appreciation from these stocks can help grow the overall investment portfolio, leading to long-term wealth creation.
Impact on the World
On a larger scale, the increasing popularity of dividend growth investing can have several positive effects on the world. For instance, it can lead to more sustainable business practices as companies focus on generating consistent cash flows for their shareholders. Additionally, it can contribute to a more stable economic environment as these companies pay out dividends, which can be reinvested or consumed, thereby fueling economic growth.
Conclusion
Dividend growth investing is a powerful strategy that offers both passive income and long-term capital appreciation. By focusing on companies with a proven track record of increasing dividends, investors can build a resilient and rewarding portfolio. With stocks like MPWR, STLD, JPM, CTR, FR, and REXR leading the charge, dividend growth investors are well-positioned to reap the rewards of this investment approach. Whether you’re an individual investor or part of a larger economic system, the impact of dividend growth investing can be profound and positive.
