The "dividend grower" trade is still one of the most reliable
And according to a study by Credit Suisse, successfully
investing in "dividend growers" is not a recent trend. Credit
Suisse broke down the S&P 500 into four equally weighted
portfolios which include the following:
- Stocks that grow dividends
- Stocks that pay dividends but do not grow their
- Stocks that pay no dividends
- Stocks that cut their dividends
As you can clearly see in Credit Suisse's chart above, stocks
that grow their dividends outperform all other categories over
the long term.
And if the forty-plus years of evidence are not enough to
prove that "dividend growers" trump almost all other investments
over the long term, take a look at the next chart.
First, I want to apologize for the small font. But when you
are covering 138 years' (1871 -2009) worth of data, it's hard to
get away from a reduction. However, don't let this discourage you
from the powerful message this chart displays.
What happens when you invest $1, factoring with or without
- The $1 would have been worth $181 in 2009 without
- The $1 would have been worth $70,000 in 2009 with growing
Unfortunately, none of us will be around that long to reap the
rewards of 138 years worth of investing, but you get the point:
investing in dividend growers pays handsomely over the long
Over the past six months, we've highlighted how more and more
people are recognizing the power of dividend growers. With
interest rates low, the fashionable thing on Wall Street has been
for fund managers to say, "I own safe blue-chip dividend
Making this idea even more attractive is how well blue-chip
dividend growers held up during every market sell-off. For
example, look at the last real sell-off in late 2011. Riskier
stocks fell 25%-50% in just a few months. But most of our
favorite dividend growers held up just fine.
That's why since that period, investors have been piling into
elite dividend growers like Wal-Mart (
), Microsoft (Nasdaq: MSFT) and Intel (Nasdaq: INTC), caused a
surge of buying momentum and have sent their share prices
Take Microsoft, for example…
Last month, the world's largest software producer increased
its quarterly dividend 22%. Consider that in mid-2010 Microsoft
paid just 13 cents a share, so the tech giant has doubled its
dividends in about three years.
Like it or not, Microsoft is one of the greatest brand names
in the world. The shareholder-friendly, blue-chip tech behemoth
provides products necessary for businesses and individuals alike.
This makes it one of the most reliable
in the world. As you can see from the chart below, it's drawing
huge money flows because of it.
Shares have climbed over 50% since the lows back in late
2011…and is nearing a 52-week high.
Microsoft's move is no doubt impressive when you consider that
several other big tech names haven't come close to those types of
High Yield Trader
know we recommend "investing" in these types of
shareholder-friendly dividend-growers by selling put options or
selling covered call options. These strategies are a great way to
generate double-digit income streams in a conservative
As our returns have shown since we started the
High Yield Trader
service, this idea is working and working well beyond our