Best Dividend Stocks For The Long Run – 10 Years Later

Exactly a decade ago, I wrote an article that outlined the best dividend stocks for the long run. I have used the criteria to create this list in my newly started dividend investing newsletter.

The article from a decade ago had a few simple ideas behind it:

1) Buy and hold works, which is why it makes sense to hold stocks for the long run. 

2) Owning quality companies is important. A history of consistent dividend increases shows a company which is good at capital allocation and has a business model worth studying

3) Purchasing equities at attractive valuation is as important as selecting great companies with outstanding fundamentals. Even better, it was a perfect time to be buying equities at the depth of the Great Recession

4) Diversification is important – while I looked for strong companies with durable business models, I also wanted to avoid concentrating too much on a single sector. An ounce of prevention is worth a pound of cure.

5) Dividends are a key component of investor returns. Dividends are more stable and reliable than share prices and are easier to forecast. The portfolio has an average yield of close to 3.50% in 2008, with a low P/E ratio and a low dividend payout ratio. While there were some cuts along the way, the dividend income was sufficient for an imaginary retiree with a nest egg to 

A decade ago I created a list of 40 dividend growth companies from a variety of sectors. The average P/E ratio was 11.70, and the average yield was 3.45%. The 5-year average dividend growth rate was over 15%/year. It was relatively “easy” in hindsight to find quality companies at depressed valuations back then. The only problem was that most individuals were scared of stocks, given the recession, growing unemployment, bank failures and the daily reminders of how tough things really are. I do believe that if you select the right businesses, and think like a business owner, you can do well over time as an investor. As we all know, by focusing on the passive dividend income, dividend investors can afford to ignore the news and stock market fluctuations. Investing for the long-term could pay off for the rare soul who has patience on their hands.

I created the list by studying companies in the dividend aristocrats and dividend achievers lists. While I was familiar with the list of dividend champions, I hadn’t utilized it as fully as I am today. The list is here:

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Disclaimer: I am not a licensed investment adviser, and I am not providing you with individual investment advice on this site. Please consult with an investment professional before you invest ...

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