Dividend Aristocrats are stocks on the S&P 500 that have consistently raised their payouts for 25 years or more. Studies show stocks that initiate a dividend and then raise them over time have outperformed all other stocks over time. Yet, there are limits to the strategy.
Just focusing on how long a stock has raised its dividend is not enough. What investors need to do is focus on dividend growth stocks that can afford to keep making their payouts. Growing a dividend at double-digit rates and generating enough free cash flow (FCF) to maintain the payout ensures a business will keep sharing its wealth with investors.
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