Are Dividend Growth Stocks In A Bubble? - Seeking Alpha

Are Dividend Growth Stocks In A Bubble? - Seeking Alpha: Introduction and Background

There has been a spate of recent articles and comments stating or implying that dividend growth stocks are in a bubble. David Jackson, the founder and CEO of Seeking Alpha, stated the following in a recent comment.

I haven't found any other asset class [beside dividend growth stocks] where there are similar causes or indicators of potential overvaluation risk, specifically:
1. macro factors (interest rates, demographics, and tax rates),
2. a significant preponderance of positive articles on SA, with relatively few "challenging" articles,
3. high and rising interest from novice investors. (Please note: I'm *not* saying that all dividend investors are novices; there are many deeply experienced and sophisticated dividend investors.)

Dividend Aristocrats Are Undervalued - Seeking Alpha

Dividend Aristocrats Are Undervalued - Seeking Alpha: Seeking Alpha is a great resource for the everyday investor in great part because of the open source nature of the information it offers. The Seeking Alpha site has only one agenda, and that is to help its readers become better prepared and smarter investors. David Jackson, Seeking Alpha's founder, recently directed readers to an article titled "New Highs, New Lows, Yield Greed" by David Merkel that he felt was important, and that subsequently generated a lively comment thread.

Often, the comment threads that a Seeking Alpha article instigates can be of greater value than the article itself. I feel that this was the case with the above-referenced article. The following excerpt from one of David Jackson's comments in the article corroborates my introductory remarks:

Dividend Growth Portfolio: 2012 Mid-Year Update - Seeking Alpha

Dividend Growth Portfolio: 2012 Mid-Year Update - Seeking Alpha: My Dividend Growth Portfolio (DGP) is a public portfolio that I created to illustrate the principles of dividend growth investing. I report on it periodically so that people can see how one person (me) executes a dividend growth strategy and what its results are.

The DGP's main purpose is educational. Both myself and readers can learn from my good moves and mistakes. I use both hits and errors to tighten up the Dividend Growth Portfolio Strategy that I use to govern the portfolio. In addition to its educational goal, the DGP is an actual component of my retirement portfolio. It has my own real money in it.

Dividend Challengers Smackdown XXVIII - Seeking Alpha

Dividend Challengers Smackdown XXVIII - Seeking Alpha: In the most recent installments of the Smackdown series, I screened the Dividend Champions (which can be found here) starting with Most Recent (Percentage) Increase and, last month, with stocks' Estimated Earnings Per Share Growth for the Next 5 Years.

(Note that I have separated the Champions, Contenders, and Challengers into different articles to fit more closely into the format preferred by Seeking Alpha. Champions are companies that have paid higher dividends for at least 25 straight years; Contenders have streaks of 10-24 years; Challengers have streaks of 5-9 years. I use the same Roman numeral for all three articles.)

This month, I decided to focus on measures of "fair value" and dividend yield (and growth). So I screened as follows:

Dividend Contenders Smackdown XXVIII - Seeking Alpha

Dividend Contenders Smackdown XXVIII - Seeking Alpha: In the most recent installments of the Smackdown series, I screened the Dividend Champions (which can be found here) starting with Most Recent (Percentage) Increase and, last month, with stocks' Estimated Earnings Per Share Growth for the Next 5 Years.

(Note that I have separated the Champions, Contenders, and Challengers into different articles to fit more closely into the format preferred by Seeking Alpha. Champions are companies that have paid higher dividends for at least 25 straight years; Contenders have streaks of 10-24 years; Challengers have streaks of 5-9 years. I use the same Roman numeral for all three articles.)

Dividend Champions Smackdown XXVIII - Seeking Alpha

Dividend Champions Smackdown XXVIII - Seeking Alpha: In the most recent installments of the Smackdown series, I screened the Dividend Champions (which can be found here) starting with Most Recent (Percentage) Increase and, last month, with stocks' Estimated Earnings Per Share Growth for the Next 5 Years.

(Note that I have separated the Champions, Contenders, and Challengers into different articles to fit more closely into the format preferred by Seeking Alpha. Champions are companies that have paid higher dividends for at least 25 straight years; Contenders have streaks of 10-24 years; Challengers have streaks of 5-9 years. I use the same Roman numeral for all three articles.)

105 Dividend Champions For July 2012 - Seeking Alpha

105 Dividend Champions For July 2012 - Seeking Alpha: The Dividend Champions spreadsheet and PDF have been updated through 6/29/12 and are available here. Note that all references to Champions mean companies that have paid higher dividends for at least 25 straight years; Contenders have streaks of 10-24 years; Challengers have streaks of 5-9 years. "CCC" refers to the universe of Champions, Contenders, and Challengers.

With a Little Help from My Friends

June proved to be a surprising month, not only in terms of the number of promotions from one category to another, but also in terms of additions to the Dividend Champions "universe." The newest Champion - Universal Health Realty Trust (UHT) - was not expected to join that list until next year. On June 7, the company announced a modest half-cent increase in its quarterly rate, to 61.5� per share, prompting me to update its streak of increases from 23 to 24 years.