Div Tip #17: Focus on quality.

Dividend Tips

How does an investor select investments among the thousands of publicly traded companies from which to choose?   For most of us it’s a function of screening or filtering the massive pool of options down to something manageable.  Investors screen by past or expected growth rate, industry, geography, dividends, and more.  They may have multiple levels of screens to further narrow the field for selection. 

Dividend Farmers naturally start with dividend paying stocks, but not any dividend payer.  Stocks that regularly grow their dividend payments can be found under Dividend Champions, Contenders, and Challengers.  Dividend Aristocrats also lists dividend growers increasing payments for 25+ years.

In either case, companies with extended histories of growing their dividend payments exhibit investment quality as a function of their ability to throw off increasing amounts of cash.  Finding similar signs of quality among non-dividend payers requires more effort.  It’s like looking for a diamond among gem stones vs doing so among road apples.  Given the choice of starting points and the level of work involved in each to succeed, which would you rather?  If you start your search with quality, you increase the odds you’ll invest in quality companies.  Focus on quality.