Opportunities For Dividend Growth Investing

The dividend growth portfolio that I've been developing for 15 months is in a qualified tax plan with a minimum required distributions (MRD) beginning in 2014. My plan is to meet the MRD (~4%) from the dividends I receive. My focus has been on high current yield and high growth of yield. Of course quality is important and I use measures of dividend coverage to estimate the companies' continued ability to pay an increasing dividend. Also, stocks I've considered must have outperformed the S&P 500 during the latest one or two (2008, 2002) recessions. These measures are subjective and require discipline on my part to establish dividend-to-earnings ratios and time periods to compare prior performance.

Safety ratings, as suggested by Chowder, provide an effective and simple screen for financial safety. Many stocks meet this rating. I will use the rating for my dividend growth investing. I also know that many attractive dividend-payer and dividend-growth stocks are not rated. So, I will still rely on my assessment of earnings, historically good performance, etc., to identify high quality companies. If I'm successful, these companies will be financially strong, having low debt and strong cash flow.

Source: Seeking Alpha

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