Screening for sustainable dividend growth
This week I’m looking at a topic close to my heart – finding companies that can provide a sustainable, growing, dividend income.
A portfolio of such shares has the potential to provide a reliable passive income, with minimal trading. Over long periods, sustainable dividend growth tends to reflect underlying business growth, and should also lead to share price growth.
This means that with dividends reinvested, a dividend growth strategy can also be a good way to generate long-term compound gains.
In pursuit of a systematic approach to finding sustainable income, I’ve built a new screen to try and capture what I believe are the essential qualities of a good dividend.
I should point out straight away that this screen will probably exclude some suitable stocks and include some unsuitable choices. That’s okay with me. Indeed, I think it’s to be expected.
As with the StockRanks, the purpose of a screen isn’t to achieve a 100% success rate. That’s not realistic. Instead, we want to swing the odds in our favour by selecting a statistically favourable group of shares. I think I’ve been able to do that here, as I’ll explain.
Sustainable income screen criteria
In this section,...