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How To Outperform The Market With The Best Dividend Growth Stocks

Published Thu, 07 Mar 2019 13:23:37 -0500 on Seeking Alpha

Dividend growth investing is a simple and effective investment strategy. To begin with, there is plenty of academic research proving that dividend growth stocks tend to outperform the market in the long term.
The table from Hartford Funds, based on data from Ned Davis Research, shows how dividend growth is a key return driver. According to this data, companies that consistently raise their dividends tend to outperform the market. Such as important, companies that cut their dividends underperform by a wide margin.
Source: Hartford Funds
An image is worth a thousand words, and the chart shows that investing in dividend growth stocks can have a major impact on investors' net worth over the long term.
Source: Hartford Funds
It's easy to understand why dividend growth is such an effective return driver. While accounting earnings can be easily manipulated by management, dividends are paid in cold hard cash, making dividends a far more transparent measure of fundamental value.
When a company rewards investors with consistently growing dividends, this is indicating that the business generates more cash than it needs, which is a clear sign of underlying fundamental quality.
Dividend growth investing can also offer some important behavioral benefits. In the words of Ben Graham:
The investor's chief problem-and even his worst enemy-is likely to be himself.
Investors can many times be hurt by their impulses and emotions, often buying and selling too... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
TWO HARBORS INVESTMENT 13.14   0.0 -1.73 1.60 12.19
TERNIUM 22.92   3.2 7.09 1.20 5.35
CARNIVAL PLC 45.09   10.6 4.25 2.00 4.45
BOSTON PRIVATE FINANCIAL 11.56   12.4 0.93 0.48 4.06
HUNTINGTON BANCSHARES 13.70   11.0 1.24 0.56 4.04
BRINKER INTERNATIONAL 39.84   10.5 3.79 1.52 3.93
SAGA COMMUNICATIONS 31.00   0.0 0.00 1.20 3.89
SOUTHSIDE BANCSHARES 32.08   14.5 2.21 1.24 3.82
KEYCORP 17.38   10.1 1.72 0.68 3.81
AVAGO TECHNOLOGIES 284.27   35.0 8.11 10.60 3.71
CATHAY GENERAL BANCORP 34.79   10.3 3.38 1.24 3.47
MAGNA INTERNATIONAL 48.34   5.9 8.15 1.46 3.06
JUNIPER NETWORKS 27.29   17.0 1.61 0.76 2.82
JPMORGAN CHASE 115.12   12.4 9.26 3.60 2.78
MACATAWA BANK 9.99   12.0 0.83 0.28 2.78
PNC FINANCIAL SERVICES GROUP 138.76   12.7 10.90 4.60 2.67
HERITAGE FINANCIAL 29.03   17.4 1.67 0.72 2.43
CISCO SYSTEMS 57.62   19.9 2.90 1.40 2.42
LAM RESEARCH 189.99   11.8 16.03 4.40 2.30
APPLIED MATERIALS 46.04   12.9 3.56 0.84 1.81
NORTHROP GRUMMAN 323.83   18.4 17.59 5.28 1.60
VANGUARD DIVIDEND APPRECIATION ETF 118.22   0.0 0.00 0.00 1.60
HUNTINGTON INGALLS INDUSTRIES 236.15   12.8 18.48 3.44 1.47