Best Dividend Challengers to Buy

We have long believed that investing in dividend-paying stocks, especially blue chips with a legacy of increasing their dividend consistently year after year, has always been an attractive and sound idea. Common sense would dictate that if the company is able to increase their dividend every year, then it would logically follow that their earnings must also be increasing every year. Dividends are paid out of earnings and therefore a company that is constantly increasing their dividends is likely to also be constantly increasing its earnings. On the other hand, there are many different levels and rates of growth.

We believe that total return is important. We also believe, however, that exceptional total returns can be achieved at lower levels of risk through dividend paying stocks. Also, for the true long-term holder, the rising dividend can and actually should be more important than short-term capital appreciation. This is most true when the investor has no intention of selling their dividend grower. Price levels only truly matter if a sell is imminent. Otherwise, price volatility can be ignored, as long as fundamentals remain intact and strengthen.

Source: Guru Focus

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