5-Year Rule in Dividend Growth Investing

Since the goal is reliable dividend growth, I want to select companies that grow their dividends reliably. Of course, no one can predict the future. Any company can cut, freeze, or eliminate its dividend at any time. But the past holds clues to the future. Clearly, a company that has already compiled a streak of consecutive annual dividend increases is displaying evidence that it might continue to do so. The 5-year rule is certainly not the only evidence one might seek, but it is an important part.

I use the 5-year rule as a hurdle requirement: If a company does not have at least a 5-year streak of raising its dividends, it is ineligible for consideration as a true dividend-growth stock. At the moment, there are some really interesting examples of how this rule can steer investment money toward or away from certain stocks.

Source: Seeking Alpha

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