増配株の探し方：安定成長とインカムゲインを狙う投資戦略How to Find Dividend Growth Stocks: A Strategy for Stable Growth and Income

The Appeal and Core Principles of Dividend Growth Investing

Dividend growth stocks refer to shares of companies that consistently increase the dividends they pay to shareholders. Investing in such companies, known as "dividend growth investing," is a highly attractive strategy for many investors. This is because, beyond just the dividend yield, the growth of the dividend itself offers the potential for a dual benefit: a steadily increasing stream of income over the long term and capital appreciation driven by the company's growth.

Why Dividend Growth Stocks Are Chosen

• Growing Income Stream: As corporate earnings grow, so do dividend payments, leading to a consistent increase in annual dividend income. This also offers a potential hedge against the erosion of purchasing power due to inflation.
• Sign of Corporate Health: A company's ability to consistently increase dividends is a strong indicator of stable profitability and a sound financial foundation. Dividend hikes can also signal management's confidence in future performance.
• Benefit of Compounding: Reinvesting received dividends allows investors to maximize the power of compounding, where the investment principal grows exponentially.

Investor Mindset

Dividend growth investing is fundamentally about a "long-term investment" approach, focusing on the company's sustained growth rather than reacting to short-term price fluctuations. It's also crucial to manage risk effectively by practicing "diversification," avoiding overconcentration in a single stock.

Screening Criteria for Identifying Quality Dividend Growth Stocks

Rather than indiscriminately searching for dividend growth stocks, a systematic screening process based on specific criteria can help efficiently identify high-quality companies worthy of investment. Here, we explain the key screening criteria.

Historical Dividend Growth and Consecutive Years of Increases

This is one of the most crucial indicators for assessing a company's dividend policy stability.

• Consecutive Years of Dividend Growth: A long track record of dividend increases, such as 10+ years, 25+ years (Dividend Aristocrats), or 50+ years (Dividend Kings), demonstrates a company's robust business model and strong commitment to shareholder returns. Companies that have continued to raise dividends even through economic crises and recessions are particularly valued for their resilience.
• Dividend Growth Rate: Examining the average dividend growth rate over several past years helps understand the pace of dividend increases. While a high growth rate can be appealing, excessively high rates might raise questions about sustainability; a moderate growth rate aligned with the company's earnings growth is generally preferable.

Corporate Financial Health

Even with a history of dividend increases, a weak financial foundation means future dividend growth cannot be assured. Let's check financial health using the following metrics:

• Payout Ratio: This metric indicates the percentage of net income paid out as dividends. Generally, a range of 40% to 70% is considered healthy. An excessively high payout ratio (e.g., above 80%) suggests that most earnings are being distributed as dividends, potentially leaving insufficient funds for capital expenditures or business expansion. The appropriate level varies by industry.
• Free Cash Flow (FCF): This represents the cash a company generates that is available for discretionary use. Companies with consistently positive FCF that comfortably covers dividend payments are considered to have high dividend sustainability.
• Debt-to-Equity Ratio: This ratio indicates the proportion of debt relative to shareholder equity. A lower ratio signifies a healthier financial position and reduces risk, especially in a rising interest rate environment.

Growth Potential and Future Prospects

Sustainable dividend growth requires the company itself to grow.

• Revenue and Earnings Growth: Review the trend of revenue and earnings (especially EPS: Earnings Per Share) over several past years to confirm consistent growth. It's important to identify sustainable growth drivers rather than one-off factors.
• Competitive Moat: Companies with competitive advantages that are difficult for competitors to replicate, such as barriers to entry, strong brands, patents, or network effects, tend to maintain long-term profitability.
• Industry Trends and Market Size: Assess whether the industry the company operates in is a growing market with future potential. Companies in declining industries, regardless of their current performance, are less likely to offer significant future growth.

Fair Valuation

No matter how excellent a company is, purchasing its stock at an inflated price can hinder achieving adequate returns. Use the following metrics to assess if the stock is trading at a fair valuation:

• P/E Ratio (Price-to-Earnings Ratio): Indicates how many times earnings per share the stock price is. Compare it with industry peers and historical P/E ratios to determine if it's undervalued or overvalued.
• P/B Ratio (Price-to-Book Ratio): Shows how many times book value per share the stock price is. This metric assesses the company's valuation relative to its liquidation value.
• Dividend Yield: The ratio of annual dividend per share to the stock price. Be cautious of excessively high yields, as they might indicate that the market is pricing in a risk of dividend cuts. For growth stocks, even with a low current yield, future dividend increases can lead to an attractive yield on cost.

Tools and Resources for Finding Dividend Growth Stocks

Manually checking all these criteria can be time-consuming. Efficiently utilize the following tools and information sources.

Brokerage Screening Tools

Many major brokerage firms offer "stock screening tools" to their account holders. You can set criteria such as consecutive years of dividend increases, payout ratio, P/E, P/B, and industry to efficiently narrow down potential stocks.

• [Affiliate Location: Screening features of major online brokers in your region, e.g., Charles Schwab, Fidelity]

Investment Information Websites and Databases

Specialized websites offering more detailed data and analytical features are also valuable. For U.S. dividend growth stocks, "Dividend.com" and "Sure Dividend" are well-known.

• [Affiliate Location: Introduction to global financial data providers, e.g., Bloomberg Terminal, Refinitiv Eikon, or consumer-friendly options like Seeking Alpha, Finviz]

Company Investor Relations (IR) Information

Before making a final investment decision, always consult the company's official information.

• Earnings Reports and Annual Reports: These documents provide detailed information on the company's financial status, business operations, and risk factors.
• Shareholder Letters and IR Materials: Often summarize management strategies and future outlook in an easy-to-understand format.

Caveats and Risks in Dividend Growth Investing

While dividend growth investing is appealing, it is not without risks. Be mindful of the following points:

• Risk of Dividend Cuts or Stagnation: Due to deteriorating company performance or unforeseen events (e.g., economic crises, disasters), dividend increases may cease, or dividends may even be cut. Past performance does not guarantee future results.
• The Trap of High Dividend Yields: An apparently attractive high dividend yield might, in fact, indicate that the market is pricing in poor company performance or a high risk of dividend cuts. It's crucial to assess the company's business model and financial health comprehensively, not just the yield.
• Impact of Rising Interest Rates on Stock Prices: Generally, when interest rates rise, the attractiveness of lower-risk financial instruments like bonds increases, potentially reducing the relative appeal of stocks. Dividend growth stocks, particularly those valued for their yield, may experience price adjustments during periods of rising interest rates.
• Importance of Diversification: Concentrating too heavily on a specific stock or sector can expose you to unexpected risks. Investing across multiple quality dividend growth stocks helps mitigate overall portfolio risk.

Conclusion

Dividend growth investing, by taking a long-term perspective and discerning quality and growth potential, is a powerful strategy that can achieve both stable income and wealth creation. Through the screening criteria, financial analysis, growth assessment, and information sources discussed in this article, you can intelligently identify high-quality dividend growth stocks that align with your investment goals.

However, all investments carry risks. It is paramount to make careful decisions, thoroughly considering your investment objectives, risk tolerance, and financial plan. We hope this article serves as a valuable resource for your successful dividend growth investing journey.

[Disclaimer] This article is for informational purposes only and does not recommend the purchase of any specific financial product. Investment decisions should be made at your own discretion and risk. Investments carry the risk of principal loss. Furthermore, the information provided is current as of the time of writing and does not guarantee future market trends or company performance.