Equities - Dividend Growth Investing

For the equity component of clients' portfolios I subscribe to the "Rising Dividend" or "Dividend Growth" investment philosophy. Companies that pay dividends provide investors with the opportunity to profit both now and in the future; while at the same time preserving capital and hedging against inflation in the long-run. Dividend Growth Investing is a conservative equity investment approach that emphasizes long-term thinking when making investments.

In recent years many investors have paid little attention to dividends preferring to focus on chasing returns in the hottest stocks and sectors. To me dividends have been, and always will, be top of mind! Dividends give us one of the best indicators of a company's health while at the same time allowing us to share in their current fortunes. Dividends give us a meaningful tool in attempting to calculate a companies true worth. While I am very interested in companies who are financially strong enough to pay attractive dividends I pay particular attention to those companies who are in the enviable position to be able to, consistently and significantly, grow their dividends.

Research has shown that over the long term dividends matter! Dividends have, on average, accounted for 40% of total investment returns over the last decade. Statistically, stocks with rising dividends consistently show price growth that is highly correlated to the dividend growth. As such, I focus much of my time on researching the companies I am interested in to ensure that this phenomenon will occur.


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