On the North East of the US is a bank called TD – it also has operations from Maine to  to Florida and is located in Canada. If you had bought 100 shares in 1983 and left it your account, you would now have 2,400 shares and the dividend would bring you $4,500 a year which is more than the 100 shares cost in the first place.

What is the catch? it takes time, but your research included stocks which can grow their dividends in a predictable way. The word predictable is the noted because the firm which was focused on John Heinzl’ s column Dividend growth – an investor’s best friend jheinzl@globeandmail.com is Kaspardlov Laverty and Associates who run a Predictable Dividend Growth fund.  According to Pat McHugh the other indicators he looks for include:

a relatively low price to earnings multiple

a relatively high dividend yield

a high return on equity or ROE

a high degree of earnings as measured by stability of income.

These things matter for what they should tell you – dividend increases, because that signals a high level of confidence in the future. That and it would look bad if the board of directors increased the dividend and then turned around and said we made a mistake, because the first question shareholders would ask is what else did you made a mistake on?

The return on equity offers the company has a very good cost controls or they have their pricing model correct. The companies are probably focused on the long term.

Linking to dividend paying stocks, much of investing is picking the right stock in the first place. If you pick one which pays a dividend, has the ability to raise the dividend in the future, then you should be able to hold an receive the dividends for a long time without worry and risk. If the company can pay their dividend, because they are profitable the multiple at which the company’s stock trades rises over the years and you are wealthier.

There are more questions than answers, till the next time – to raising questions.