03-20-2014, 11:14 PM
I keep coming back to this thread but not sure what I wanted to add. I basically agree with what everyone has said. Now I think I've figured out what I wanted to add ...
I think the diversity in yield and growth rate will help average out your growth rate to a more consistent rate you can plan for. Another way of looking at it is that your higher yielders (is that a word?) can provide the bulk of your income stream in the earlier distribution years giving time for the lower yields and higher growth rates to "catch up" and the take over the bigger component of your dividend stream.
This may be something to think about based on your stage in your investment career. For an older person on the cusp of retirement and planning on funding their lifestyle from the income produced, you may want to emphasize the higher yield component more and have fewer fast growers that can add significantly to income 10-15 years into retirement. The younger fellas may want to focus more on the lower yield but faster growers (especially with a lower payout ratio) since they have much more time for compounding the yield to grow into their desired income stream. Along with the faster growth in the dividend, you may also capture more capital appreciation along the way albeit that you may experience more volatility along the way.
I am reminded of Robert Allan Schwartz' dividend growth site here which categorizes the companies and their growth streaks. Only 14 companies were able to grow their dividends at 10% annually for 10 years. This out of 660 dividend growth companies he starts out with.
I think the diversity in yield and growth rate will help average out your growth rate to a more consistent rate you can plan for. Another way of looking at it is that your higher yielders (is that a word?) can provide the bulk of your income stream in the earlier distribution years giving time for the lower yields and higher growth rates to "catch up" and the take over the bigger component of your dividend stream.
This may be something to think about based on your stage in your investment career. For an older person on the cusp of retirement and planning on funding their lifestyle from the income produced, you may want to emphasize the higher yield component more and have fewer fast growers that can add significantly to income 10-15 years into retirement. The younger fellas may want to focus more on the lower yield but faster growers (especially with a lower payout ratio) since they have much more time for compounding the yield to grow into their desired income stream. Along with the faster growth in the dividend, you may also capture more capital appreciation along the way albeit that you may experience more volatility along the way.
I am reminded of Robert Allan Schwartz' dividend growth site here which categorizes the companies and their growth streaks. Only 14 companies were able to grow their dividends at 10% annually for 10 years. This out of 660 dividend growth companies he starts out with.
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“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan