A good way to think about dividend growth for an investment already in a portfolio is “yield based on purchase price.” This divides the current dividend by the original purchase price. A growing dividend distribution will result in a yield based on purchase price that is above the yield when the investment was purchased. And, over time, a stock with a fast growing dividend distribution can often provide shareholders more income than would be attained by purchasing a stock that had a higher yield, but little or no distribution growth.
We have chosen two rather different equities to highlight today: CVR Partners (UAN) and Transocean (RIG). Both have high dividend appreciation potential out to 2017-2019, but differ significantly beyond that. The first is a domestic producer of nitrogen fertilizers and a limited partnership, while the second is the world’s largest offshore oil and gas driller.
Source: Value Line
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