What are Dividend Growth Stocks?

Taking a Look into Dividend Growth Stocks & Weekly Activity

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What Exactly is a Dividend Growth Stock?

Many that have been following my journey with me, know I have a passion for dividend growth investing. These stocks make up a significant portion of my portfolio but doesn’t fully represent my preferred choice of investment. This week, I want to talk about the true meaning behind a dividend growth stock and what I personally look for. So, let’s jump into it…

When people think of dividend growth stocks, they will more than likely reference back to the “Dividend Kings” of the industry. These are dividend-paying businesses that have increased their annual dividend for at least 50 consecutive years. Businesses such as: Procter & Gamble, AbbVie, Johnson & Johnson, 3M, Abbott Laboratories, Coca-Cola, PepsiCo, & many others. Inasmuch as I want to agree with referencing back to Dividend Kings as top dividend growth stocks, I have to disagree and say that’s essentially flawed to an extent. It’s a classification you should take into consideration when identifying potential dividend growth stocks, but there is one metric that needs to be emphasized, that’s the Dividend Growth Rate (DGR).

There are three “primary” classifications of dividend growth stocks. These are Dividend Kings, Dividend Aristocrats, & Dividend Achievers. Dividend Kings are at the top of the list with at least 50 consecutive years of annual dividend increases, then Dividend Aristocrats with at least 25 consecutive years of annual dividend increases, and lastly, we have Dividend Achievers with at least 10 consecutive years of annual dividend increases.