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There is an excellent case to be made for investing in companies that raise dividends. The “Case for Rising Dividends” explains why this strategy could make sense for capital appreciation and growth of income. A portfolio strategy can be organized and implemented under this philosophy. 

Mark of Quality

We believe companies with a history of dividend growth provide the right starting place in a search for quality. Importantly, steady increases in dividends often follow consistent profitability and shareholder-focused management. A dividend growth perspective looks beyond today’s current yield and considers other factors, such as quality. A track record of dividend increases can also be viewed as a tangible signal by a company’s management that they are both willing and able to boost a payment to shareholders. Dividend growth can point to quality fundamentals.

We conclude companies with rising dividends tend to offer:

1. Shareholder-focused management
2. Solid financial performance
3. Lower volatility
4. Strong performance during tough markets
5. Attractive current yield
6. Potential for income growth
7. Tax-efficient capital appreciation

Dividend growth is a good place to start in a search for quality. Other factors including consistency, low debt, and profitability are also important. Instead of searching for high yield, why not look to rising dividends and quality instead?