As a dividend growth investor, I am always on the lookout for companies with good dividend growth. My wife and I have a goal to live off the dividends once we hit retirement. I also want to make sure we pay a fair price for the stocks. My purchasing criteria is fairly straightforward and as follows. For core holdings, we want companies that: 1. Have at least 10 consecutive years of dividend growth 2. Are considered by S&P Capital/Morningstar to be no more than 5% overvalued 3. Are considered by F.A.S.T. Graphs to have a current price to earnings ratio that is no more than 5% overvalued when compared to the five-year average price to earnings ratio 4. Have a dividend yield above 2.0%. Dominate their sector of the economy.
Hasbro (HAS), Nike (NKE) and VF Corp. (VFC) are companies with large market share that offer investors excellent dividend growth. Are you noticing a theme here? I like owning the top companies in a sector of the economy. The "Big Boys" in each industry are able to make more and more money from their products. They can then use those earnings to increase their dividends. Because dividends will fund our retirement, owning companies that are willing and able to increase their payouts are the ones that will power our golden years.
Source: Seeking Alpha
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