Dividend Yield vs. Dividend Growth: Which Wins?
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Dec 20, 2024
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FinSafe Team
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6 min read
High current yield (payouts today) is tempting, but dividend growth is often a stronger signal of quality.
The High Yield Trap
Stocks with extremely high yields often have them because the stock price has crashed, suggesting the dividend might soon be cut.
Yield on Cost
Focus on companies that increase their dividends every year. Over 10-20 years, your 'yield on cost' can reach double digits.
The Total Return Angle
Don't just look at cash flow; look at the total growth of the investment including share price appreciation.