What makes a good dividend stock? Every dividend growth investor is looking for a stock that will increase its dividend each and every year at a rate that makes the stock a better investment than fixed income alternatives. I have found that stocks that are able to do this share some common characteristics.

Brand Recognition/Low Price

During an economic downturn consumers may flee many popular brands if their cost is high and generic alternatives are substantially cheaper. Procter & Gamble Co. (PG) (Analysis) has seen this occur in some of their premium brands like Pampers and Tide. However, most people aren't willing to save a few pennies on a generic soda of unknown quality when a Coca Cola Co. (KO) (Analysis) or Pepsico Inc. (PEP) (Analysis) is available.

Value-Priced Convenience

In addition to Brand Recognition/Low Price some companies also provide convenience. If you have been out shopping all day and are tired, you are likely to stop on the way home and pick up something that is quick and inexpensive. There seems to be a McDonald's (MCD) (Analysis) on every corner. A stop there provides the guest with a known commodity – clean restrooms, quick service and an inexpensive meal.

A Superior Operating Model

How do you compete with a company like Wal-Mart (WMT) (Analysis)? As most of their competitors have learned, you can't beat WMT at providing brand name, quality merchandise at rock bottom prices.