Recent Investment

Good Morning,

Throughout my experience as a dividend growth investor, I have identified three types of dividend growth stocks. Each type of equities comes with a distinct set of yield and growth characteristics, which the enterprising dividend investor can use to their advantage. In my dividend portfolio, I own all types of equities, in order to benefit from long-term growth and also to add some sustainable high income in case growth doesn’t turn out as expected.

The three types include:

The first type includes high yielding stocks, which typically grow distributions more slowly.

The second type includes companies in the sweet spot. These are dividend stalwarts, which generate strong earnings growth, and have average or above average yields.

The third type of dividend growth stocks includes companies with strong earnings and dividend growth, which tend to have below average yields. These are the companies that are in a growth stage, and they tend to reinvest most of their earnings back into growing the business. Such companies have the potential to deliver high total returns over time, and the rapid dividend growth from a low base could deliver double or even triple digit yields on cost after a couple decades.

A diversified dividend growth portfolio would have allocations to companies in all three categories.

I wanted to let you know that I initiated a position in a new company. It is a company with a lower current yield, but a high potential for future dividend growth. It’s in the third type category