Recent Investment for February 9th
I decided to add to my existing position in a dividend achiever. A dividend achiever is a company which has managed to increase annual dividends for at least 10 years in a row.
The Dividend Achievers list is based on the concept that certain equity investments can provide a rising cash stream of income over the long run, while offering the additional benefit of potential price appreciation. Annual total return for some stocks may compare favorably with other investment alternatives. Dividends can also serve as signals from companies management teams about the future. When directors increase dividends, they're signaling that they believe that future earnings will be able to maintain the higher dividend payment. This shows their confidence in the near term business prospects and timing of cashflows for the business they are managing.
Peter Lynch has discussed his fascination with the Handbook of Dividend Achievers. These are the words of Peter Lynch from "Beating the Street" below:
“The dividend is such an important factor in the success of many stocks that you could hardly go wrong by making an entire portfolio of companies that have raised their dividends for 10 to 20 years in a row. Moody’s Handbook of Dividend Achievers – one of my favorite bedside thrillers – lists such companies. Here’s a simple way to succeed on Wall Street: buy stocks from the Moody’s list and stick with them as long as they stay on the list.”