Even though I sold my dividend stocks and moved to a two-ETF solution earlier this year, I still believe that an investor with the right temperament and patience can succeed with a dividend growth (or value investing) strategy over the long term. With that in mind, I’m pleased to share this guest post from Dividend Earner as he introduces his new Dividend Stock List:

After years of investing with expensive mutual funds I knew had to make changes, but I was always afraid that investing in stocks required a lot of money. Back then, a transaction cost $30. Investing in stocks has become a lot more accessible today, since you can invest $1,000 now and only pay 1% or approximately $10 per transaction.

While I did invest in mutual funds that paid dividends, I had no growth and I wanted both stock appreciation with good dividend growth. It took me about 5 years to figure out what data I needed access to and how to approach my investing decisions.

Related: 6 reasons to invest in dividend growth stocks

Below is the proof showing the results of my dividend investing approach. Nearly all of my stocks have increased their dividends this past year, and at a rate higher than inflation in general. 2015 represents the projection I currently have based on my holdings. Everything is a process; there is no magic intuition or gut feeling. As long as you have access to the data you need to make your decisions.

annual dividends

Dividend investing seems simple from a broad perspective but there are some nuances that need consideration when looking for the right stocks for your portfolio.

There is a tendency for those looking to generate income to gravitate towards REITs. Not long ago, yield-hungry investors were focused on income trusts; however a change in tax policy saw many income trusts switch back to corporations and lower their dividend payouts.

Depending on your dividend investing journey, your approach may have evolved or adjusted based on your learning. My approach has certainly changed over the past 5 years and I am now focused on dividend growth while I am in the accumulation years.

The dividend yield is lower than investing for income, but there can be greater stock appreciation through a dividend growth strategy as opposed to focusing on stocks with the highest dividend yield.

Related: Pitfalls of chasing the highest dividend yield

When I started investing, I had difficulty finding the stocks that really mattered for my portfolio. I went through income trusts, as well as the usual banks and telecoms.

To organize and simplify my research, I started putting together a list of companies that were of interest. I initially looked for companies that provided a good yield, but later felt I was missing out on growth from lower yield companies so I started including many more firms in my research to compare companies within the same sector.

I also decided I needed 10 years of data to sufficiently understand the current management’s track record. Even if a stock has paid dividends for 100 years, it’s not the same management team that did that and economic realities change a lot in 100 years.

Sure, it means the company has a great business to last that long and pay dividends, but I wanted to be more aligned with recent history than ancient history as the last 10 years would highlight how the current management team can handle the current economic realities and provide a glimpse in their abilities to grow and control dividends based on their earnings.

Stock list

The Dividend Performance List

I ended up with a comprehensive list of stocks with a lot of key data to show growth over the past 3, 5 and 10 years. What I found most powerful was the ability to filter the data quickly, sort the list, and do a comparison of companies in the same sector. The historical data is important to assess trends since a stock may have a good 10 year average on some data but then it goes down on the 5 and 3 year average.

RelatedDividend investing – Getting started

My stock research became a lot simpler thanks to the Dividend Performance List. I now prefer the Dividend Performance List to the Canadian Dividend Aristocrats list as I have the true ability to choose how many years of consecutive dividend increases I want to assess to determine what a reliable Canadian dividend company should be.

Remember, investing is a journey and it takes time and patience. If you sign up for Dividend Earner’s newsletter, you’ll get a list of 25 stocks matching a strict 10 years of dividend growth along with 10% compound annual growth in dividend. I could not put this list together without the Dividend Performance List.

Author Bio: Dividend Earner is a DYI dividend investor working on retiring on the income from his investments.


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