May 7, 2018

5 Excellent Dividend Growth Stocks to Beat May Swoon


With the start of May, investors have turned cautious given the long history of weak performance during the summer months (May to October) per the old adage “Sell in May and Go Away.” Amid such a scenario, honing in on the dividend growth strategy seems to the best practice.

This is because investors can enjoy rising current income while awaiting capital appreciation irrespective of market conditions.

Why Dividend Growth?

Stocks that have a strong history of dividend growth belong to mature companies, which are less susceptible to large swings in the market, and thus act as a hedge against economic or political uncertainty as well as stock market volatility. At the same time, these offer downside protection with their consistent increase in payouts.

Additionally, these stocks have superior fundamentals that make dividend growth a quality and promising investment for the long term. These include a sustainable business model, a long track of profitability, rising cash flows, good liquidity, a strong balance sheet and some value characteristics.


Further, a history of strong dividend growth indicates that dividend increase is likely in the future.

Moreover, a history of dividend growth year over year leads to a healthy portfolio with greater scope of capital appreciation as opposed to simple dividend paying stocks or those with high yields. Although these stocks do not necessarily have the highest yields, they have outperformed for a longer period than the broader stock market or any other dividend-paying stock.



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