I am a dividend growth investor. I want to own shares of companies that reward shareholders with dividends and dividend growth. When I first started investing, I was focused almost entirely on yield, as I thought larger yields was the most important thing to reach my retirement goal of living of dividends in my golden years. I loaded up on the Altrias (NYSE:MO), Realty Incomes (NYSE:O) and AT&Ts (NYSE:T) of the world. If a company didn't offer a starting yield above 3%, I wasn't interested. These types of stocks offered a great starting yield but often didn't provide much in the way of high dividend growth. While those positions have been fairly successful, I began to wonder if I was missing out on quality companies simply because they offered lower yields.
As my investment philosophy has "matured" over the years, I've come to realize that dividend growth is an important aspect of dividend growth investing. Companies that are able to aggressively raise their dividends usually do so because earnings are accelerating and they are able to offer investors an excellent reason to own their stocks. Since I've decided to expand my investing universe into lower yielding/higher dividend growth stocks, I've added companies like Visa (NYSE:V) and Starbucks (NASDAQ:SBUX). These companies often had yields below 1 or 2%, but can offer great dividend growth. Visa has raised its dividend an average of 30.7% the last five years, while Starbucks has done so to the tune of 30.5% per year over the same time period. How many companies can claim a dividend raise of over 30% every year for the past 5 years?
