There is a school of investing thought that recommends focusing on stocks that grow dividends at a high rate year after year. It is often used by retirees or investors planning for retirement. It is one that I also follow. But the best dividend growth stocks would also support wealth accumulation even when the dividend income is being withdrawn such as during an investor's retirement. Stocks that grow their prices as well as dividends over time provide increasing wealth and income.
The price vs. dividend increase trends will be reviewed for the following 5 stocks: NextEra Energy (NYSE:NEE), Omega Healthcare Investors (NYSE:OHI), Colgate-Palmolive (NYSE:CL), Procter & Gamble (NYSE:PG) and Waste Management (NYSE:WM). For these 5 stocks the average dividend yield, ADY, has been 3.62% and the average dividend income growth rate, ADIGR, has been 9.7%, so that the sum, the average total income growth rate, ATIGR, has been 13.31% over the years 2005 to 2013. Dividend yield is defined by the price at the last trading day of the year and the dividend for the year. This date is somewhat arbitrary, but as investors often compare gains on an annual basis, it is considered an appropriate reference.
Source: Seeking Alpha
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