Why We’ll Focus on the Market’s Strongest and Most Reliable Dividend Growers in 2014

Americans spent an incredible $68.1 billion on astrology, psychic readings and the occult in 2012.

What’s more shocking is that astrology and fortune-telling revenue continues to grow at nearly 5% per year. That’s a better growth rate than some Fortune 500 companies!

Now, if you think it’s just uneducated people who believe that somebody can predict the future, think again…

[ad#Google Adsense 336×280-IA]In 1914, the Comptroller of the Currency expressed his belief that, with the creation of the Federal Reserve, financial panics would be “mathematically impossible.”

Why? Because the enormous amount of data available to the Fed would allow it to predict the future.

Of course, his assumption was proven to be very wrong.

More recently, former Fed Chairman, Alan Greenspan, said in a 1996 speech that “there may be some unbelievably complex set of equations that exist [to know the future].

But we haven’t been able to find them, and do not believe anyone else has, either.”

Since it’s so difficult, should we give up entirely on trying to predict future outcomes? Absolutely not.

We just need to understand our limitations and only focus on predictive tools that, well… work!

The good news? The most accurate predictive tool in the market is totally free. So stop paying Miss Cleo for new stock market predictions – and start focusing on this metric, instead…

The Best Way to Predict the Future

There are a few reliable methodologies available to us lowly investors to aid us in predicting likely future outcomes.

For income investors, however, there’s no better predictor of future stock prices than dividends.

It’s an immutable fact that stocks with long histories of dividend growth increase in value faster than stocks with little or no history of dividend growth.

Additionally, stocks with long histories of dividend growth hold their value better than stocks that don’t boost their dividends over time – especially in a bear market.

The following stock serves as a perfect example.

Demand Down, Dividend (and Shares) Up

As you likely know, Altria (MO) manufactures cigars and cigarettes, and owns the Marlboro brand.

Seeing that tobacco sales have decreased 50% in the past 30 years – as the number of smokers in the United States continues to decrease – tobacco stocks aren’t an obvious growth investment.

I mean, what could be worse for the future of a company – and, in turn, share prices – than its market getting slashed in half?

Amazingly, though, Altria’s stock has risen by more than 1,300% over the same time period.

How could we have possibly predicted such a monster move? All we had to do was look at the dividends…

The entire time that demand was declining domestically, Altria kept increasing its dividend.
Back in 1983, the company paid a quarterly dividend of about $0.03 per share. Now it pays a quarterly dividend of $0.48 per share.

Indeed, the company has a history of increasing dividend payouts for more than 40 years. (Over the last three years, the company has increased its dividend by an impressive 8% per year, on average.)

I’m sorry. But a company can’t pull off that feat unless it has figured out a way to remain profitable through all market conditions.

Bottom line: Altria’s dividend told the future to anyone willing to listen. That’s true of all dividends. They provide a glimpse into the most likely outcome for the specific stock, and that’s really the best we can hope for.

It should come as no surprise then, as we flip the calendar into 2014, that we plan to focus on uncovering the market’s strongest and most reliable dividend growers. Stay tuned!

Safe (and high-yield) investing,

Louis Basenese

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Source: Dividends and Income Daily