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UBS Senior Equity Strategist David Lefkowitz on why investors should focus on dividend growth when picking dividend-paying stocks.
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Investors are you using the correct metrics the right formula when picking dividend paying stocks.
UBS senior equity strategist David left what says that he has a strategy.
To do just that he's gonna teach you how he's here in a Fox Business expert David good to see you thanks for joining us.
I -- thanks for having me a parade of people over the past year and a half have come on and said despite his stock but as a dividend why is that not a good idea.
-- we think you have to be very specific about the kind of dividend strategy that you have we folk we think -- most important focus on dividend growth.
Rather than just yield for yield -- So we combined.
Attractive dividend yields with the growth characteristic and -- if I could just very quickly -- -- -- -- growth is so important.
I think take the S&P 500 -- right now it's yielding.
Rough numbers 2.2 percent is that dividend yield to get if that dividend grows 10% a year over the next five years.
The yield he'll get on that original investment will grow to 3.5.
Percent and then if it grows another 10% over the next five years so.
10% a year for ten years.
-- you'll be you'll be getting a yield of over five and a half percent.
At that point in time so it's the power of compounding growth in dividends.
That's really serves investors well over the long term.
OK so so if you were to say what the formulated this teach people how to do this of the U wanna look and see the history of how a company -- paid a dividend.
I just pull out and -- for example they have a history of consistently raising their dividend so.
Is that what you want to do you want to pick up past what ten years and all the quarters ago with enough.
-- that's I think it's a great -- -- where we look for.
Ten year history.
Have more than 4% growth in dividends.
We we we find that -- good threshold -- -- -- ten year history what else tenure history.
4% growth annually at least.
And if you marry that with -- -- yield that is higher than the current market yield right now it's about two and a half 2.2 percent.
That is that's usually are starting point.
David's -- name some different sectors where you can find this growth dividend within -- -- can you step -- for one minute we're gonna take a quick break.
