Updated: October 12, 2016
Dividend growth stocks deserve a place in your portfolio, no matter how modest the allocation, simply because they often return 100% to 200% or better relatively quickly as their payouts rise.
You’ve probably noticed you rarely see your favorite stock paying more than 2% or 3%, even if the company raises its dividend every year. That’s because its price gets bid up as its payout rises – so you never quite get the bargain 4% yield you’re always waiting for, unless something really bad happens (like 2008).
Take industrial firm 3M (MMM), which boosted its dividend by 141% over the past decade for 170% total returns:
3M’s Dividend Growth Drives 170% Returns
Yet aside from the financial crisis, you never had a chance to buy the stock at a yield above 3%.… Read more