What is "Good" Dividend Growth?

[TomK]

I know this is an impossible question, and that in most cases the answer is "it depends," but without knowing anything else about a company, what do you consider a good 5 year average dividend growth rate? Maybe to make the discussion a little more manageable, let's assume we are talking about large, mature companies that have been paying and raising the dividend for a long time -- that is, 20% raises are not to be expected.

I know we all want dividend growth to beat inflation, but are you happy with 6 to 8% growth per year? Or do you consider that average or slow?

If you had to assign a grade to 7% average dividend growth, is that a B+ or a C-?

Just curious how you all calibrate expectations.

[EricL]

I think the Chowder Rule is pretty fair when dealing with the dividend growth rates. If I'm talking utilities, tobacco or REIT's yielding 4 or 5%, I'm pretty happy with a growth rate of 5-7%. Large cap blue chips yielding 3-4% I'd be looking for 8-10% and for higher growth stocks yielding 1-2% I'd be looking for 15%+.

[rnsmth]

I treat my portfolio like a symphony. I have higher yielding high dividend growth stocks, higher yielding lower growth dividend stocks, medium yielding stocks with moderate growth rates and a couple of lower yielding with higher growth rates. Together they make beautiful income growth music.

[KenBob]

While a dividend growth rate less than inflation is a sell criteria, I use a dividend growth rate larger than the GDP growth rate as a buy criteria. For the last 5 years, that has been about 2.35%.

[Roadmap2Retire]

I think something in the 6-8% is a good zone. I go for both low-yield-high-growth and high-yield-low-growth companies, but some companies fall right in the middle of that spectrum - something like JNJ which has a 5-yr DGR of 7.6%.

On a side note, I like visuals, so I plot Yield vs Growth Rate to see if there are any holes in my portfolio. Not that I will try to pick something that would fit into that hole, but just for a better understand of my portfolio composition.

[CritMass]

Roadmap, fascinating visual.

[Joey Batz]

Great visual, Roadmap! How do you get something like that? I'd like to use that for my own portfolio.

[Roadmap2Retire]

Joey, I created it in Google Docs. Ive shared it if you want a template.

https://docs.google.com/spreadsheet/ccc?...fV1E#gid=0

[Joey Batz]

Is there a way to import my own information over to that template that I am missing? It doesn't let me alter it (I want to put my own portfolio in there) and opening up a new document using a template doesn't give me yours (in fact, no matter how hard I search, I can't find your template).

[Roadmap2Retire]

Joey,
The document I have shared is on my account and shared with the public and others can simply view/read it.

I gather you have a Google account of your own. You will have to make a copy and save it to your own Google Docs. Simply click 'Make a copy' under 'File'. Once a copy is created in your own account, you will be able to edit it.

Hope that helps.

[Jimbo]

(12-14-2014, 10:51 AM)Roadmap2Retire Wrote: Joey,
The document I have shared is on my account and shared with the public and others can simply view/read it.

I gather you have a Google account of your own. You will have to make a copy and save it to your own Google Docs. Simply click 'Make a copy' under 'File'. Once a copy is created in your own account, you will be able to edit it.

Hope that helps.

Took me a bit of time to figure it out, but I have access to it.

Nice doc.

I spent most of the last couple of days getting everything into the puter and on spreadsheets.

Aint easy, when your puter challenged.

Thanks for the access.

Jim

[Davidgomes]

Some companies deliberately pay high rate of dividends to entice the investors and once their purpose of raising capital is obtained, decrease the rates significantly or may defer the dividend one pretext or the other. Good companies with mature management pay dividends on a affordable range and they try to sustain if not improve it. Companies that raise their dividends do so because their earnings are increasing. You are going to want to look for out for strong companies with strong growth before you ever invest in it. When you buy for the dividends you buy for the long term so buy something that will be around for a while.