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Ten plus years ago I started a love affair with dividend growth investing. A key part of my overall investment strategy, dividend stocks are always there for me. They are the world’s most reliable passive income stream.
As a bonus, high dividend yielding companies outperform companies with low to no dividends.
History has shown high dividend yielding companies, on an annualized total return basis, have outperformed the lowest dividend yielding companies by 3.68%, and the S&P 500 by 2.45% from 1957 – 2012.
Source: The Enduring Qualities of Dividends, Lyle B. Schonberger, May 21, 2013; Ameriprise Financial
There are a lot of options for dividend investors to consider, including
Dividend Kings (50+ years of annual dividend increases) and Dividend Aristocrats (25+ years), or my favorite category of emerging dividend starts (annual dividend increases of 6% or more).
To help investors find and consider solid dividend growth stocks I have prepared my third annual Top 10 Dividend Stock report. My dividend picks are vetted using my methodology for investing in the right dividend stocks, included as part of the Wealthy Owl's Guide to Dividend Investing. My process includes consideration for dividend growth track record, ability to sustain dividend growth, business model and current valuation.
Performance of my picks from the last two annual reports
Reflecting on my 2020 and 2021 reports, I am pleased with the performance overall of my portfolio of picks. I use the Dow Jones U.S. Dividend 100 Index - S&P Dow Jones Indices as the benchmark for comparison.
2020 Top 10 Dividend stock report (Performance over two-years):
The total dividend yield on cost of the 2020 portfolio of picks finished 2021 at 3.8%.
All 10 stocks raised their dividend year-over-year, with an annualized dividend increase of 15% over a two-year period, as a total portfolio.
Total return (stock price appreciation + dividend yield) for my 2020 top 10 dividend stock portfolio is 80.5% over a two-year period.
2021 Top 10 Dividend stock report (Performance over one-year):
The total dividend yield on cost of the 2021 portfolio of picks finished 2021 at 2.8%.
All 10 stocks raised their dividend year-over-year, with an increase of 20% over a one-year period, as a total portfolio.
Total return (stock price appreciation + dividend yield) for my 2021 top 10 dividend stock portfolio is 35% over a one-year period.
2022 Picks Live
Many of my 2022 top picks should benefit from key growth trends such as the accelerated digitization of our world, semiconductor demand, the industrial internet of things and infrastructure spending. I favor thematic based investing and bringing this approach to dividend investing makes me even more bullish about my 2022 picks.
While I'm feeling pretty bullish about these picks, markets over the course of a year cannot be predicted. One thing I believe you can count on with these stocks is an increase in their annual dividend. I'm looking forward to reporting back to you the overall performance of this portfolio of my top 10 dividend stocks at the end of 2022, no matter the result.
Check out my 2021 report to get a sense of the level of analysis I provide.
If you are interested in downloading your free copy of the Wealthy Owl's top 10 dividend stocks for 2022, sign up for my free monthly newsletter now.
Happy investing and happy holidays!
The Wealthy Owl
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