Dividend Growth Investing

Dividends are the most famous source of passive income. If you earn a Dollar and put it on a stock that pays a dividend, you can potentially earn from that stock forever! The question is, if that company will survive long enough to pay dividends?

That is what dividend growth investing is all about. Investors try to find stocks that have long and consistent streaks of dividend paying periods in the past. The idea is, if companies can survive for many decades they are probably having a business model that is strong enough to adjust on most economic changes. With that business model, a company can always earn a profit from its business. And if a business is profitable, it can also pay dividends to its investors.

Introduction to Dividend Growth Investing

Generally the idea of Dividend Growth Investing is simple. You build yourself a portfolio of stocks that pay a regular dividend. The rules are simple, too, as the main focus is dividend quality. That means, we need to find stocks that have a high probability to keep the current dividend level -- or even better -- raise dividends in the future.

Because nobody is able to see the future, most dividend investors rely on the past. Although everybody knows that the past is not a good predictor for the future, it is still a widely spread approach.

Based on that approach there exist 3 lists that contain all the stocks that have paid dividends for a specific timeframe. The most famous list is the list of Dividend Aristocrats. It contains companies form the S&P 500 stock index that have been paying dividends for at least 25 years without cutting the amount payed to the shareholders. The second list is the list of dividend achievers containing companies that have been paying for at least 10 years.

The third list is the list of Dividend Champions that contains all US-american stocks that pay dividends for at least 25 years. Unlike the Dividend Aristocrats list, it does not limit the selection on index requirements or the size of trading volume.

Most dividend growth investors start their search of good stocks to buy in one of those lists.

Further Readings


  1. Love dividend growth investing and how it can provide an ever increasing passive income stream for life. I started with the dividend aristocrats and think that it's a great list for anyone looking to start a DGI portfolio.

    1. I agree with you. It is a great way for a relatively stable passive income. The downside is that it is quite slow to accumulate wealth!