One of the most important factors to consider in a dividend stock is the dividend growth rate of the company. This goes both on a historical level, as well as a company’s predicted future dividend growth rate. A stock yielding 3%, for example, might seem like a dividend stock not worthy of attention when compared to higher-yielding securities.
However, if this stock is increasing its dividend by double-digit increments each and every year, in seven years or less, the stock’s yield will be roughly 6% and mirror those of the higher-yielding stocks, usually which a much safer business model and in a more defensive fashion.
This is precisely what I like about Fortis Inc. (TSX:FTS)(NYSE:FTS). The company has consistently raised its dividend distribution each and every year for nearly five decades. This absolutely impressive track record deserves recognition.
There’s a real incentive for the company’s management team to keep this history of dividend increases alive. There’s also the reality that raising a dividend in a challenging economic environment is difficult to do. Just think of all the crises and recessions we’ve been in for the past fifty years.
There’s perhaps no more stable dividend growth stock on the TSX right now. To make things even better, Fortis has a current yield of 3.8% which eclipses the returns investors could receive from fixed income securities like bonds right now. This is a bond-like yield with real growth upside – there’s a lot to like with Fortis for long-term dividend investors.
Invest wisely, my friends.
