Research from a top money manager confirms my longstanding opinion: dividend growth stocks are the best income investment.
Central banks around the world are punishing savers with low interest rates. But that doesn’t mean you can’t earn a healthy income from your investment portfolio. Blue chip dividend stocks are the solution to low yields from saving accounts, CDs, and bonds.
The third quarter marked a record high for global dividends. During the quarter, companies paid out dividends totaling $288.1 billion.
[ad#Google Adsense 336×280-IA] That was an impressive 9.7% increase from the third quarter of last year, according to Henderson Global Investors.
Companies around the world are finally listening to their shareholders.
In a low-yield world, investors want to collect a safe dividend. The only thing better than a steady dividend is a growing dividend.
The global economy is now five years into its recovery.
With sales growing and profits reaching record highs, public companies are sharing those profits with investors.
Henderson Global estimates that total dividends for 2014 will be up 10.6%. Their outlook calls for dividend growth to slow to 7.2% in 2015. That means dividend growth stocks should continue to perform in the coming year.
For dividend investors, the U.S. offers the fastest dividend growth. In the third quarter, U.S. companies grew their dividends by 10.8%. Top sectors for dividend growth included financials, software, and telecom.
The financial sector in particular is worth highlighting. On a global basis, financials represent more than one-quarter of all dividend payments. Globally, they grew only 2%. But here in the U.S., the financial sector upped their dividend payments by 20.7%.
High yields are great. But I believe that dividend growth is The Real Secret to Dividend Wealth. That’s because a dividend stock that grows their payouts tends to see their share price rise. While many dividend growth stocks pay out smaller yields, their overall returns are far superior.
In my High Yield Wealth investment advisory, I’ve built a portfolio of the best dividend stocks. It includes many well-known dividend stocks that are committed to growing their payments.
One example is Altria (NYSE: MO). In 2011, I recommended Altria to my subscribers. At the time, the stock traded at $27 and paid a $1.64 dividend. That translated to a 6% dividend yield.
Since then, Altria has increased its quarterly dividend by 27%. Meanwhile, the stock price has jumped 82% as investors have piled into blue chip dividend stocks.
If you bought Altria today, the company would pay you a decent 4.2% yield. That’s more than double the yield from the 10-year U.S. Treasury.
High Yield Wealth subscribers who bought Altria at $27 are earning $2.08 in dividends from this stock. But based upon their low purchase price, they’re earning a cost-basis-yield of 7.6%.
In just three years, Altria’s capital gains and dividends have delivered 100% gains to our subscribers. And we earned those gains from a well known, blue chip dividend stock…not some risky tech startup or high-flying growth stock.
— Ian Wyatt
Sponsored Link: If you’re interested in building a portfolio of blue chip dividend stocks like Altria, you’ll want to check out High Yield Wealth. Just click here to learn more about our premier investment advisory for dividend investors.
Source: Wyatt Investment Research