(Dividend Growth Investor) Dividend growth investing
is an investing strategy, where investors buy stock in companies which consistently raise distributions. This leads to higher dividend payouts overtime, and also leads to capital gains, as the market adjusts stock prices to reflect the higher income generated by the stock. Dividend growth does not just miraculously appear out of a thin air however. In order to get dividend hikes every year, the company has to generate earnings growth over time.
For example, back in 2001, Chevron Corporation
) earned $1.85/share, paid a dividend of $1.325/share and traded at $44.81/share. Ten years later, in 2011 the company is earning $13.44/share, the dividend is $3.09/share. The stock is trading around very comfortable $100/share. The company is expected to distribute at least $3.24/share in 2012. Investors who purchased the stock a decade ago are sitting at handsome capital gains, and are earning 7.20% yield on cost
In order to generate high returns from dividends and capital gains, investors need to focus on companies which will be able to earn higher amounts in the future. Corporations that have designated roadmaps to generate higher earnings per share, increase investors odds of receiving higher distributions and enjoying capital gains in the process. Below, you could find a list of four companies which have outlined their corporate strategies of achieving high earnings per share for the next several years:The Coca-Cola Company
), a beverage company, engages in the manufacture, marketing, and sale of nonalcoholic beverages worldwide. This dividend king
has raised distributions for 50 years in a row.
Coca-Cola's 2020 Vision Strategy
strives for a high single digit annual EPS growth throughout this decade, driven through 5%-6% annual increases in revenues as the company expects 3%-4% yearly increase in sales volumes.