My Dividend Growth Buy List showed tremendous relative strength last week. In fact, our Buy List climbed an average 1.3% higher, while the S&P 500 and Dow both rose only about 0.3%. Our biggest winner surged more than 9% higher after the company increased its quarterly dividend by 50%. In today’s blog, we’ll take a look at why my Dividend Growth strategy has been so successful…
It’s simple. At Dividend Growth, we’re focused on companies with strong underlying fundamentals, and in turn, the financial stability to increase their quarterly dividends year-after-year. Companies with weak sales growth, earnings growth or cash flow, on the other hand, are more likely to cut buyback programs and dividends to free up the cash to run their business.
That’s why any stock that’s added to the Dividend Growth Buy List must meet our strict criteria. First, a stock must receive top marks in Dividend Grader. In order to receive the coveted A-rating, the stock must have a history of increasing its dividend, as well as have the ability to continue to pay and increase its dividend going forward.
Second, a stock must receive an A-rating in Portfolio Grader, too. In order to receive this top ranking, a stock must have superior fundamentals and strong buying pressure. And if a stock meets all of these criteria, then it’s dubbed an "AA-rated" stock and qualifies to be added to the Dividend Growth Buy List.
In the case of our recent high-performer from last week, the stock currently receives an A-rating in Portfolio Grader and a B-rating in Dividend Grader. But in light of the company’s massive dividend increase, I expect the stock to be upgraded back to an A-rating in short order. That’s because it’s paid a quarterly dividend for eight-straight quarters, and has a 5.06% 12-month dividend growth rate. Plus, shares are up 17% for us in the past two months alone.
The bottom line: When you stay focused on "AA-rated" stocks with strong fundamentals that support consistent and rising dividend payments quarter-after-quarter, capital appreciation is also sure to follow. So, I look for our Dividend Growth stocks to continue to outperform the broader indices in the upcoming weeks and months. If you’re interested in joining Dividend Growth today, simply click here to get started now.