No. of Recommendations: 1
I have a question on researching dividend growth rates, do most people here use the DGR figures from David Fish's CCC list (along with the projected 5 year dividend growth model he provides)? This is what I'm doing and it's very helpful, but I'm wondering if I should be doing more due diligence (David Fish just makes it too easy, not that I'm complaining :)

Dividend payment history and dividend growth rates are important screening tools. Stocks with interrupted (read: cut or reduced) dividend histories, or low dividend growth rates tend to suggest what the company will do with future dividends. This is not always accurate, as we saw recently with CTL, but it is accurate most of the time.

One of the features DF's spreadsheet of Dividend Champions/Contenders provides is the rate of change of dividend growth. This is from the column labeled "A/D" (Acceleration/Deceleration). A ratio grater than 1 means the dividend growth rate has increased over the past 5 years. <1 means its slowed.

The best metric, to me, in the ability to predict future diviend growth has to do with what % of the company's free cash flow is being paid out in dividends. The trend in this ratio is what is most important.

Print the post  


When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.