Dividend Growth Investing

Hello Everyone,

Nice to see someone started this thread. I have implemented this strategy and result so far is decent. 85% of Expenses are now covered with dividend which is growing each year.

However, I just want to tell upfront that this strategy only make sense to people who are looking to get out of rat race and allocate more time to activities they like and have some time( which is substantially less that their regular job) for tracking Dividend growth portfolio. This might not create huge wealth like growth stocks. But it can give you time(which is very valuable) upfront.

Ironically all this year, I convinced myself that I will not get much capital appreciation and just get cash flow from dividends. But recently most of the dividend stocks have turned into growth stocks. E.g. CDSL,Infosys,RITES,SJVN, Tata Investment corp , IRFC etc. Off course some of them might just correct after market euphoria resides.

People mostly look at dividend yield which is not fair if someone wants to build Dividend growth portfolio. Most important thing is the consistency in paying out dividend. Second is increase of dividend in every 1 or 2 years. And this goes without saying that it should be quality company on all fundamental parameters such as Free cash flow, ROE etc.

With above in mind, sometimes yields might not be attractive at the beginning. But consider this as sapling which will yield good fruits in future (Which it does in my experience).

There is no harm in looking at Dividend option of mutual funds if they are paying out regular dividend. I understand argument about NAV reduction and giving your moneyback. But in realty this doesn’t work like that. SEBI has mandated mutual funds to create corpus for their IDCW option. This means mutual funds need to do profit booking and park money in such corpus to pay out dividend. So in a way, they are doing that we would have done anyways which is book the profit and take our money at regular intervals.