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Income Investors: Should You Buy Higher Dividends Or Dividend Growth In 2019?

Published Fri, 11 Jan 2019 07:20:00 -0500 on Seeking Alpha

Co-produced with PendragonY for High Dividend Opportunities.
Dividend paying stocks have historically produced massively higher total returns than other non-dividend paying growth stocks:

This is one of the reasons why at High Dividend Opportunities, our focus is mainly on dividend-paying stocks with a preference for the two following market segments:
'Higher Dividend' refers to investment opportunities with exceptionally high dividend yields but slower growth. 'Dividend Growth' refers to investment opportunities with lower dividend yield but anticipated dividend hikes in the coming years. Both approaches have proven to produce strong total returns along with high income.
Today, as we move into 2019, we look for important investment themes, we compare valuations and seek to determine which segment is likely to produce the best results going forward.
Higher Dividend or Dividend Growth: How do they compare?
"Higher Dividend Stocks" and "Dividend Growth" stocks are similar in that they both generate a sizable portion of their total returns from dividend income. Total returns are the sum of:
Dividend income Price appreciation The return generated from dividend income is very easily computed with the dividend yield.
The appreciation potential is however less certain and comes from cash flow growth and multiple expansion.
In this sense, the main difference between both approaches is how returns are... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
ARES CAPITAL 17.00   8.4 2.02 1.60 9.36
AT&T 31.07   10.8 2.87 2.04 6.69


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Dividend Increases For The High-Yield BDC Sector, Part 5: BlackRock TCP Capital
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