Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

How To Build Dividend Growth Stock Portfolio? (11 March 2012)

The dividend growth (NYSE:DG) stock portfolio can be build by different principles. It seems interesting to compare performance of Div. Champions-like indexes (positive DGR for more than N years) from David Fish's data from 2007 or from early data as follows

a) cap-weighted

b) equal weighted

c) dividend $$$ weighted [how much $$$ company distributed. It means investing more in companies that pay more $$$ i dividends in where ( dividends in $$$ )= (dividend per share) x (number of shares). ]

with quarterly, semiannual and annual rebalances and dividends investments as

i) DRIP-like in the same company

ii) re-invest in accordance with weights a) b) c) above between different companies

iii) keep for new div champs (how?).

I invest almost equal amount of money (I got from dividends of other companies and I save from my salary) if different "new for me" (mostly DG) companies at right IMO price and consider it as invested capital. Then I almost don't care how market price "now my" company except two extremes - too high (above 2X -3 X in relatively short time) or too low (below 30%) - which force me to think (but not necessary to act).

I'm not sure that this so-called quasi-equal weighted portfolio (again in terms of invested capital not in terms of current price) is the optimal way, so the bottom line questions are:

a) is it optimal for individual investor to have equal- or dividend$$$- weighted portfolio? (I guess cap-weighted isn't optimal)

b) Which option (cap- or dividend$$$-weighted) is better for ETF or mutual fund ( they cannot rely on equal-weighted - to much trading cost)?