I close with the following discourse lifted from the pages of an SA article by one of my favorites, Todd Johnson;
- Five stocks CAT, KO, MCD, PG, XOM that have performed very well over the last thirty years were examined and found to have performed well over the last thirty years.
The question I'd like to have the answer to is: how did five typical stocks that had performed well over the thirty years ending thirty years ago perform in the next thirty years?
Might they have included Polaroid Land, NCR, GM, and other blue chips? -
@Victor ... >>> Might they have included Polaroid Land, NCR, GM, and other blue chips? <<<
I have studied this extensively! Those companies were not dividend growth companies, they were simply companies that paid a dividend. That's a huge difference!
I focus on the dividend growth, and it's the dividend growth that will provide the clues as to whether a company is in financial trouble or not.
When you have a company raising the dividend 7 to 9 percent every year, the cash has to be in the bank.
When a company that used to pay a 7 to 9 percent increase every year, drops to 3 to 4 percent and the payout ratio rises, there's your caution sign! Time to monitor.
If the dividend growth goes lower or the company freezes the dividend, then it's time to sell. The company may not go under, but I won't give them a chance to either.
Maintain the historical dividend growth patterns or it's time to move on. It's as simple as that.
I have the success formula that NEVER fails.
High Quality + High Current Yield + High Growth of Yield = High Total Return.
If one of the criteria to that formula is missing, time to consider selling.
