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Strategies & Market Trends : Dividend investing for retirement

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To: Ernest K Brandt who wrote (3755)	2/12/2010 9:09:04 AM
From: chowder	1 Recommendation of 34328

If you are looking for dividend stocks that have the potential to show dividend growth plus capital gains over the long run, and plan on reinvesting those dividends, my top two picks would be PG and JNJ. Both of these companies are financially sound. Both of them have products that people must buy on a regular basis. Both of these companies raise dividends regardless of economic conditions. Price may drop, but dividends continue to grow. Therefore, reinvesting the dividends helps total return even when share price drops due to the dividends buying shares at lower prices. Procter & Gamble (PG) has raised their dividends every year for the past 56 years! They have a 5 year dividend growth rate of 11.16%. Based on the current dividend yield and expected future dividend growth, you can expect the dividends to double in 12 years. After that, compounding should really start to kick in. Johnson & Johnson (JNJ) has raised their dividends every year for the past 47 years. They have a 5 year dividend growth rate of 11.74%. Today's yield, although decent, isn't what the focus should be on. The dividend growth rate is more important. A 10% dividend growth rate per year is excellent! Other selections would be: ADP - 34 years of consecutive dividend increases. A 5 year dividend growth rate of 23.2%. VFC - 37 years of consecutive dividend increases. A 5 year dividend growth rate of 20.2%. PEP - 38 years of consecutive dividend increases. A 5 year dividend growth rate of 16.9%. These are just a few ideas. In my opinion, for long term investments, I want blue chip companies with a history of paying dividends and increasing them.

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