Just look for businesses with at least 10 years of consecutive dividend growth!
are cash payments distributed to a company's shareholders. Only businesses with durable competitive advantages can pay increasing dividends for more than a decade.
In fact, out of the more than 5,000 publicly traded businesses in the US, less than 5% of them meet this high standard of quality.
These businesses are the “creme da la crème” of the stock market!
Some legendarily profitable and stable members of the "dividend raiser" club include: Wal-Mart, Coca-Cola, Exxon, Pepsi,
Just consider that…
• Discount retailer Wal-Mart has increased its dividend payment every year for 44 years.
• Oil giant ExxonMobil has increased its dividend payment every year for 36 years.
• Soft-drink giant Coca-Cola has increased its dividend payment every year for 56 years.
These businesses paid and increased their dividends through recessions, wars and real estate busts. They paid their dividends during the dot.com bust. And they paid their dividends during the 2008-2009 financial crisis.
In short, companies with more than 10 or 20 years of consecutive dividend increases are the strongest, safest companies in the world. And this is despite many of them selling "basic, boring" products like medicine, soda, food, candy, cigarettes, toothpaste and deodorant.
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So how can you find and invest in these “dividend-raisers”?
Well, several of these lists are compiled each year.
One is called "Dividend Achievers." It's the list compiled by NASDAQ of companies that have increased their dividends for at least 10 consecutive years. As of 2019, there were 264 members of this list.
Another list is called "Dividend Aristocrats." It's the list of S&P 500 companies that have increased their dividends for 25 consecutive years. As of 2019, there are only 57 members of this list.
You can think of these lists as "cheat sheets" to uncover the world's best businesses.
And the real kicker is...
Instead of investing in individual “dividend-raisers”, you could invest in all of them through a single low-cost investment like an exchange-traded fund (ETF).
A perfect one for SA investors is the CoreShares Global Dividend Aristocrats ETF.
So instead of buying unproven business based on impulses, charts, and hot tips, rather buy quality, stable and proven businesses that can safely grow your wealth over the long-term.
See you next week.
Joshua Benton, The South African Investor
P.S. Did you know there are also JSE-listed stocks that grow and pay you dividends?
Well, I’ve identified six of the best guaranteed to pay you consistent dividends every year. You can find all the details in my book Retire Rich with Dividends