Dividend growth might have been an investing staple of the
past decade or so. But these past few months, dividend stocks have been
pinching their pennies.
Dozens of companies have announced dividend cuts or
suspensions since the start of March. That includes more than 5% of the S&P
500 Index. In fact, in April, more S&P 500 companies reduced or killed off
their dividends than announced payout raises.
Investors – especially those nearing or in retirement – who
are banking on regular cash income have been backed into a corner. The number
of dividend stocks that are able to sustain their payouts is thinning, and
those that can briskly grow those distributions over time are an even smaller
group. (Remember: Income growth is vital; inflation erodes the spending power
of stagnant dividends over time.)
So where you can you look for dividend growth? Consider theDIVCON system from exchange-traded fund provider Reality Shares. DIVCON uses a
five-tier rating, from 1 to 5, to gauge companies' dividend health. A DIVCON 5
rating indicates not just a healthy dividend, but a high likelihood of dividend
growth. DIVCON 1 dividend stocks, on the other hand, are the likeliest to cut
or suspend their payouts.
Within each DIVCON rating is a composite score based on
factors including free cash flow-to-dividends, profit growth, buybacks as a
percentage of dividends and more.
Here are seven safe dividend stocks with big dividend growth
potential. Not only do these stocks boast the top DIVCON rating of 5, but they
generate enough cash profits to pay their dividend several times over: a good
indication that dividend growth will continue well into the future.
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