Demystifiing Dividend Stocks

When I first got into the financial industry, I was an assistant on a trading desk, eventually working my way up to trader. Before I knew how to analyze a company by reading balance sheets and income statements, I learned about stock charts. Two key concepts in reading stock charts are: 1. The trend is your friend and 2. A trend in motion stays in motion. Essentially, what these two concepts mean is that a stock will continue moving in the same direction until it doesn’t any more. How’s that for insight?

Typically, a company with an established trend of increasing their dividends will raise them again next year and the year after that and the year after that . . . unless it becomes impossible to do so. Management knows that investors have come to expect the dividend boost every year and any change in that policy will send them running for the exits. I call these companies “Perpetual Dividend Raisers,” and they come in more than one variety.

Source: Investment U

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