I found another great resource site yesterday - Dividend Based Investing (at dividendgrowth.org). With an emphasis on Canadian companies the author, who spent 16 years in the investment industry, promotes dividend growth investing, a practise that combines growth and value approaches by looking for stocks that are undervalued but which have high and sustainble growth rates. Citing work by other analysts and theorists, the author maintains that growth of yield is the single best piece of information an investor can have since it implies:
- A company is financially strong enough to raise its dividend.
- There are sufficient earnings to support a dividend increase.
- Management has a clear commitment to grow the company.
- Management is confident enough about future cash flows to share current prosperity with share holders.