long-term investing

The past two weeks have been pretty uneventful in terms of dividend increases, mainly due to the Christmas and New Year’s holidays. Once the majority of market participants returned to their trading desks, it was again business as usual. The markets did end the week 4.20% lower, which left the largest ETF by assets that tracks S&P 500, the SPY, down 1.2% on the year.

In 2008 the dividend aristocrats’ index outperformed the S&P 500 by 15.50 percent. The dividend aristocrates lost 21.55% in 2008 versus the 37.00% loss for the S&P 500. In December Standard and Poor’s updated their Dividend Aristocrats list. The companies which were added were:

The stocks that I selected are representative of four high-yield sectors, where dividend investors typically shop for current income. Furthermore despite their high current yields, the dividend payments for the four stocks below seem sustainable.

Dominion Resoures and Realty Income Increased their payouts to shareholders last week..

Last week saw even more notable dividend increases as companies from many sectors showed confidence not only in their ability to generate increasing profits, but also to share the wealth with their owners.

Dividend Growth Investing is a strategy that allows investors to purchase dividend stocks that have a long history of increasing their dividend payments to shareholders. These stocks have sound business models which have withstood the test of many recessions.

Last week marked yet another rollercoaster performance in the stock market, as major indices clocked in yet another weekly loss. Markets rebounded from their lows on Monday as they were reassured by General Electric (GE) that it will maintain its dividend payment in 2009, which boosted the stock by over $2 in one day.

Many pundits are comparing the recent bear market declines in the major US indexes to the market action from the Great Depression. Some go as far as comparing the current market decline to the bursting of the Japanese stock and real estate bubbles in the early 1990s. These comparisons are of course not fruitful as each bear market is different than the rest

Not all companies are conserving cash in this difficulat credit environment; there were several dividend increases which reiterate my opinion that the dividend cuts might not spread to the non-financial sector.

Last week the markets broke through yet another set of support levels to the lowest point in 11 years. Pundits, technical analysts and others kept getting more bearish on the markets and the economy. There were however several stocks which showed enough confidence in their financial situation that they decided to stick with their dividend payment plans.

In theory it makes sense for companies to reinvest all of their earnings straight back into the business, compounding the growth rate of the enterprise to achieve a higher asset base. If a company can put their earnings to good use, there is no reason for them to pay fat dividends.

Last week the markets continued their roller coaster ride, sending most investors accounts to new five year lows. On Thursday the S&P 500 broke through its October lows and reached its lowest level since 2003, before recovering the very same day.

Last week there were several companies that cut or suspended their dividend payments. As part of my studies to uncover market inefficiencies pertaining to dividend stocks I am measuring the performance of those dividend suspenders or cutters. As part of my sample I am measuring stocks which trade at least several hundred thousand shares per day.

In my blog, Dividend Growth Investor, I am always trying to find out the best dividend stocks which would provide me with a dividend income stream that would increase above the levels of inflation for many decades to come. If I didn’t have any time to go through all the hassle of picking individual dividend stocks however, I would have turned to dividend ETF’s.

I regularly check the wires for companies which are increasing dividends. That way I have another control which would enable me to find promising dividend growers to add to my watchlist for accumulation. This week there were several companies announcing healthy dividend raises to shareholders.