Investors Pile Into Stocks Likely to Keep Raising Dividend

Call them the new growth stocks. After rushing into dividend stocks of all stripes this year, some investors are homing in on a more select group: stocks of companies that are likely to keep raising their dividends at a fast clip. It is all part of the chase for better returns on the heels of the Federal Reserve's announcement last week of another round of bond buying aimed to keep interest rates at rock-bottom levels until the economy improves. As yields on the 10-year Treasury wallow at near-record lows and "junk"-bond yields also are sinking, investors are seeking anything that offers some extra income.

For months, that meant investors bought shares of nearly any high-dividend-paying company, be it telecommunications companies such as Verizon Communications Inc. (VZ) and AT&T Inc., (T) energy producers such as Sempra Energy (SRE) and tobacco company Altria Group Inc. (MO). But now that has made many stocks too expensive, some investors said. "All I'm looking for is high-quality companies that have some dividend yield and also the ability to grow that dividend at more than the rate of inflation," said Mr. Freeman, who helps oversee $14 billion across stocks and bonds.

Source: Wall Street Journal

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