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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 12.94   0.0 -1.73 1.88 14.34
TERNIUM 25.69   3.6 7.09 1.20 4.62
BOSTON PRIVATE FINANCIAL 11.10   11.9 0.93 0.48 4.34
HUNTINGTON BANCSHARES 13.32   10.7 1.24 0.56 4.24
KEYCORP 16.87   9.8 1.72 0.68 4.06
SAGA COMMUNICATIONS 28.60   0.0 0.00 1.20 4.01
CARNIVAL PLC 51.22   11.7 4.38 2.00 3.81
BRINKER INTERNATIONAL 41.98   11.1 3.79 1.52 3.71
AVAGO TECHNOLOGIES 272.59   18.4 14.80 10.60 3.66
SOUTHSIDE BANCSHARES 34.95   15.8 2.21 1.24 3.47
CATHAY GENERAL BANCORP 36.33   10.8 3.38 1.24 3.43
MAGNA INTERNATIONAL 43.79   5.4 8.15 1.46 3.28
JUNIPER NETWORKS 25.40   15.8 1.61 0.76 3.02
PNC FINANCIAL SERVICES GROUP 131.34   12.0 10.90 3.80 2.92
JPMORGAN CHASE 111.35   12.0 9.26 3.20 2.89
MACATAWA BANK 10.61   12.8 0.83 0.28 2.68
CISCO SYSTEMS 56.01   19.3 2.90 1.40 2.48
HERITAGE FINANCIAL 30.16   18.1 1.67 0.72 2.40
LAM RESEARCH 183.67   11.5 16.03 4.40 2.27
APPLIED MATERIALS 40.35   11.3 3.56 0.84 1.87
VANGUARD DIVIDEND APPRECIATION ETF 111.02   0.0 0.00 0.00 1.83
HUNTINGTON INGALLS INDUSTRIES 209.95   11.4 18.48 3.44 1.66
NORTHROP GRUMMAN 314.58   17.9 17.59 5.28 1.57