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C19 Dividend Growers Model Portfolio

The C19 Dividend Growers Model Portfolio is a list of 24 stocks that meet our criteria to qualify has a high-quality dividend growth stock.

We are not looking for stocks that pay big dividends for income here, rather the focus is still on capital growth, but a lot of research has shown if you want total return then stocks that grow their dividends is a great place to start.

For example, according to Ned Davis Research, from January 1972 to June 2019, stocks in the S&P500 that have been able to grow their dividends has vastly outperformed those that do not pay dividends

Source: Ned Davis Research 31/1/72-30/6/19. Returns based on monthly equal-weighted geometric average of total returns of the S&P500 component stocks with components reconstituted monthly.

To be able to pay a dividend, generally a company must have a strong balance sheet, consistent cash flow and excess available cash. These attributes also make them great investments regardless of their dividend.

Investors are always searching for great investments and hence their fundamental characteristics attract all investors which tends to cause their stock price to rise.

With Dividend Paying stocks you get the best of both worlds. Not only can you experience significant capital price appreciation but you also get an income stream and if you add that income stream back into your returns the outperformance is significant.

Consider the S&P500 Index verses the S&P500 Total Return Index. The Total Return Index includes the value of dividends whereas the basic index does not.

From the period 1 July 1990 to 1 July 2019 we found

Source: Data S&P Dow Jones Indices. Calculation by Capital 19

These calculations are in line with the findings of the Ibbotson Associates Yearbook in 2001 where they said for the period 1926-2001, dividends accounted for 40% of the S&P500’s total return.

Dividends Matter

All of this research points to the same thing – dividends matter and can make a significant difference to your overall returns.

Using the Ned Davis research numbers above, had you invested $100,000 in non-dividend paying stocks 40 years ago, your portfolio would be worth $299,464 now.

However, if you had invested that $100,000 in the dividend growers 40 years ago, your portfolio would be worth $4,364,230 now¹

That is a significant difference and why we think the dividend growers list is a great place to start looking for your next investment.

¹ Calculations for the purpose of illustration only and not to be taken in any other context.

But how do you find the best dividend-paying stocks to buy among the more than 2,100 available?

We do the work for you! We search all dividend paying stocks against our key metrics and pick just the top 24 that pass our rigorous tests.

As a client of Capital 19, you can receive details of these top 24 stocks and also weekly updates about how they are performing and whether we deem them still worthy to be in that list.

Key risks to acknowledge

  1. General Advice only. This list of stocks should not be considered as a recommendation for you to purchase any or all of them. We have not taken your personal circumstances into consideration and they might not be suitable for all investors.
  2.  Risk warning. The value of investments can go up and down. It is possible to lose when making investments into listed equities and you should always carefully consider if this is right for you.
  3. FX Risk. The stocks in this portfolio are valued in USD. Should you invest in any of these stocks your profit and loss will change according to the current exchange rate when you choose to convert your balance back to AUD.
  4. Historical Performance cannot be relied upon for future performance. Capital 19 makes no guarantee that investors will experience similar results in the future.