Here's where investors should look for their homerun pitches
One mistake investors make when buying dividend stocks is chasing yield. Stocks with the highest yield could be a sign a company is struggling, which could put the yield at risk. Particularly in high-interest-rate environments such as we’re in today, a company might have difficulty maintaining its payout.
Wellington Management looked at dividend stocks over 92 years between 1930 and 2022. It found stocks offering the highest level of payouts didn’t perform as well as those paying high, but not the very highest yields.
Even better, stocks that initiated and then raised their dividends were among the best stocks to buy. Ned Davis Research discovered they had the best returns of any group of stocks, whether they paid dividends or did not.
That’s not all that surprising. Dividend stocks represent companies that are typically successful and profitable. They have proven themselves. Investors should look for companies that are growing their payouts and providing rising income over time.
The following seven dividend stocks not only have a long history of increasing their dividends but have increased them on average at double-digit rates for at least five years.
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