Wednesday, January 2, 2008

* Fishing in the Bathtub

So you want to catch a really big fish? Have you considered fishing in your bathtub? Probably not. If you want to catch a big fish, you have to drop your line where the big fish swim; and if you want to snag a superior dividend investment you have to go where they gather.

My two favorite fishing holes for dividend investments are:
  1. S&P 500 Dividend Aristocrats - This list is designed to measure the performance of S&P 500 index constituents that have followed a policy of consistently increasing dividends every year for at least 25 consecutive years.
  2. Mergent's Broad Dividend Achievers - The Broad Dividend Achievers™ Index. Eligible companies must be incorporated in the U.S. or its territories, trade on the NYSE, NASDAQ or AMEX, and have increased its annual regular dividend payments for the last 10 or more consecutive years.
At the time of this writing, there were 58 companies included in the S&P 500 Dividend Aristocrats and 319 companies included in the Merchant's Broad Dividend Achievers Index. These lists provide a starting point for your evaluation; they are not a buy list.

Of the two, I consider the Aristocrats my favorite spot since it is limited to a more elite group of companies in the S&P 500 with an entrance fee of increasing dividends for 25 years, while the Achievers is open to more companies (NYSE, NASDAQ and AMEX) with a lower dividend entrance fee of 10 years. Now sometimes you don't want to spend the time driving to one of these tournament lakes, you can cast your line over to the left here in these two small ponds "Dividend News" and "Google Dividend News", or any other place dividend stocks are discussed. I have been known to pull out a couple of keepers from these spots.

Now remember, these are just companies worthy of additional consideration - the first step of the evaluation process. In a later post, I will discuss my pre-screening process.

Where do you fish for dividend investments?

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