Dividend Growth Stocks: Lower Volatility and Higher Total Return

We summarize what we were seeking as follows: We wanted to see if we could find companies of impeccable quality, with below-average volatility and superior track records encompassing both capital appreciation and above-average dividend growth. But, in addition to good historical records, we wanted to offer readers a group of companies that were worthy of further due diligence based on expectations for superior future performance. Finding companies with above-average quality, lower price volatility while simultaneously generating above-average returns represented the "Holy Grail" we sought.

There were several other potential candidates that met most of our requirements that were eliminated usually because they only failed to meet one or two. Procter & Gamble (PG) was overvalued in 1997, as were PepsiCo (PEP), Medtronic (MDT), Coca-Cola (KO) and Johnson & Johnson (JNJ). Generally, it was only due to this beginning overvaluation that caused these companies to fall short of historical performance that was double the S&P 500. Otherwise, the above-mentioned represent additional examples of companies that could be considered for further due diligence based on current low earnings justified valuation.

Source: Safe Harbor

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