Is a stock with a 3% yield and a 9% dividend growth rate better than one with a 7% yield and a 1.5% dividend growth rate? Last week we looked at yield-on-cost (YOC) and how it can be used to track the progress of a growing dividend of an individual stock. However, it is not a good metric for comparing multiple dividend stocks with each another. For this I devised a metric I call NPV MMA Differential.
As with any projection based on historical information, the analyst must determine the sustainability of the inputs going forward. Put another way, past performance is no indication of future results. I have always heard the luckiest people in the world are those who work the hardest. In the same vein, the secret to finding the best dividend stocks often involves rolling up our sleeves and doing our homework.
Source: Dividends Value
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