Identifying companies that can outperform over time
Companies that consistently grow their dividends tend to be high quality with long histories of profit and growth, strong fundamentals and stable earnings, and management teams with conviction. These features have generally enabled dividend growers to withstand repeated market turmoil and still deliver strong returns with lower volatility.
Historically, companies that grew dividends outperformed, with lower volatility.
Source: Ned Davis Research, based on an analysis of Russell 3000 stocks from 2/2/1987–12/31/2015. Results of a hypothetical $100 in stocks in the United States, divided into: Dividend Growers (dividends per share increased); Dividend Non-Changers (no change in dividend per share); Dividend Non-Payers (no dividends paid); Dividend Cutters (dividend per share decreased). Dividend activity measured over trailing 12 months. Assumes dividends reinvested and all are equally weighted. Past performance does not guarantee future results. Volatility refers to standard deviation, a statistical measure that captures the variations from the mean of a stock's returns and that is often used to quantify risk over a specific time period. The higher the volatility, the more the returns fluctuate over time.