Companies with relatively low dividend yields are often eschewed by investors, for a number of reasons. Yields is the most obvious metric investors look for, as this will determine how much an investor can expect to receive back from his investment right away, providing a “guidepost” of what he or she can expect over the long-term.
While the current yield is definitely an important characteristic to consider, as I have stated in the past, learning about the history of a company in delivering dividend increases can be just as important, or more important, in many cases to investors looking to hold a security for a long period of time.
Many growth companies start out without the ability to have high yields, however with modest increases over time, often have yields which rival other potential investments due to a higher compounded dividend growth rate over a period of time.
One company which would fit into the low yield today, potentially high yield tomorrow bucket would be Expedia Group, Inc. (NASDAQ:EXPE).
Expedia has grown its dividend more than 20% per year every year over the past five years, and while the company’s current yield of just more than 1% is certainly nothing to write home about, a 20% compounded dividend growth rate over time will certainly add up for investors looking for a mix of higher growth with the potential for meaningful dividend income in a few years’ time.
Invest wisely, my friends.
