Ganesh Kumar

Dividend Aristocrats: Top Dividend Growers

I am a big believer in Dividend investing. Currently we have Mergents Dividend AChievers and we have S& P Dividend Aristocrats. It would be great if some one wrote a detailed piece comparing them.

I have seen studies done historically which proves dividend paying companies far outperform non-dividend paying companies.

The problem is investors do not have patience and do not look it from a 10 to 20 years perspective. They always seeing a stock price growth for 5 years and decide the stock is dead beat. For example look at WMT chart for 5 years and then again for 15 years. You will see the difference.

My logical explanation as to why I like dividend paying companies is, it provides discipline to the management. IF a company is 'committed' to pay dividends and to grow them as the companies listed above, it provides them with a good guide line and they do not go on a shopping spree and waste money on big costly acquisitions. It provides a dependable inflation adjusted income stream for the patient investor.
I am still torn between share repurchases and dividends. I normally reinvest dividends through a DRIP program so I wonder whether stock repurchase is better for me tax wise. However a dividend is a public commitment to either retain or increase the distribution (I love companies that are committed to increase dividends like WMT, JNJ) but stock buy back is not a commitment. A company may choose NOT to buy back shares when the prices get too high.

I have some questions on NUCOR though. As I understand they are a commodity company without any 'brand' or moat. How do they manage to perform so well over time?

In the past I have resisted temptations to own NUCOR as it is a commodity company. Can some one provide more info as to why NUCOR will be around for next 30 years?