Dividend Growth Strategy
Dividends are cash payments from businesses to shareholders and are typically paid quarterly. Many businesses raise dividends paid to shareholders over time. Currently, there are approximately 20 businesses that have raised dividend payments to investors every year for 50 years or more and approximately 50 businesses that have raised dividend payments for 25 years or more (Footnote 1).
Generally speaking, businesses paying and raising dividends for long periods of time are well established, well capitalized and are more deliberate in how they plan and deploy their capital. From 1940 through 2016 approximately 40% of the market’s total return has been attributed to dividends (Footnote2). We believe dividends tend to be more predictable for investors than prices, particularly over the short term.
Depending on investor suitability, we believe a portion of most retirement income plans should be dedicated to a dividend growth strategy for potentially increasing investment income over time. We believe that a successful Dividend Growth Strategy has the potential to provide monthly income, income that increases every year and competitive long-term returns.
Footnote 1. Source Hartford Dividend Whitepaper 4th quarter 2017.
Footnote 2. Source SureDividend.com as of 4/30/2018.