These dividend stocks are raising payouts by double-digits
High-yield dividend stocks may be appealing, but when it comes to a long-term, income-based investing strategy, focusing on growth rather than the highest current yields may be the best way to go. After all, plenty of high-yielders can turn into dividend traps. In these situations, a dividend cut/suspension, and/or a worsening of fundamentals sends the stock lower. This outweighs cumulative dividends received.
In contrast, high-quality dividend growth stocks can provide steady payouts that increase over time, plus a stronger chance of long-term capital appreciation, as shares move higher in line with earnings growth. The emphasis here, of course, is high-quality. Plenty of companies can implement big dividend increases, only to scale back when their payout ratios get too high. Or, if the cyclical nature of their businesses makes further increases difficult.
As such, the best approach may be to focus on names with an existing long track record (at least ten years) of dividend growth, sustainable payouts (under 50% of earnings), all while offering some semblance of a yield (at least 1%). These seven dividend stocks meet our criteria. All possibly “dividend aristocrats” in the making, each one is currently raising their respective payouts by at least 10% annually.
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