(Written by Rebecca Lipman. List compiled by Eben Esterhuizen, CFA)
Who said investing and making money had to be done in a hurry? For those of you seeking to avoid the thrills (and spills) of playing the stock market, here is a trusted investing idea: Dividends!
While dividends won’t make an investor rich overnight, reinvesting dividends can help get you there over the course of time, and it can add some stability too.
If you want to be able to rely on a stock’s dividend, one good sign of dividend sustainability is a long history of dividend increases. If a company has a long-standing policy of increasing payments to shareholders, it bodes well for the future.
Thankfully, the DRiP Investing Resource centre makes that task quite simple. Every year they compile a list of so-called “Dividend Champions” – a list of companies that have consistently increased their dividend payouts for over 25 years straight. According to DRiP, there are currently 103 stocks on the list.
Insider Buying – A Bullish Indicator
Investors pay attention to insider activity for a simple reason: If they’re buying, then insiders are confident there is more upside potential, and might have a hunch their stock is going to rally. Of course, these predictions aren’t always realised, but it’s a strong indicator for outsiders to go by.
After all, company insiders such as upper management and members of the company’s board know more about their companies than any other investors.
What’s more, dividend yield is a percentage of a company’s share price, so the higher the share price the higher the return.
Interested in exploring dividend champions?
We scanned insider buying trends for all 103 companies on the list, and could only find two companies that have seen significant net insider buying over the last six months.
These companies have a long track record of boosting dividend payments, and insiders appear to think these trends will continue. Do you agree with their bullishness?
analyse These Ideas (Tools Will Open In A New Window)
1. Black Hills Corporation (BKH): Operates as a diversified energy company primarily in the United States. Dividend yield at 4.39%. Over the last six months, insiders were net buyers of 14,727 shares, which represents about 0.04% of the company’s 38.98M share float.
2. RLI Corp. (RLI): RLI Corp., through its subsidiaries, underwrites property and casualty insurance primarily in the United States. Dividend yield at 1.69%. Over the last six months, insiders were net buyers of 96,751 shares, which represents about 0.56% of the company’s 17.21M share float.
Interactive Chart: Press Play to see how analyst ratings have changed for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.