Saturday, February 18, 2012

Targeting a 10% YOC

I like to try and target a 10% YOC in 10 years based on the previous 10-year annual dividend growth rate. For reference I've created some tables to show the required current dividends based off different dividend growth rates. I've cut the dividend growth rate off at 3% since the long term annual inflation rate is around 2.5% and I want my income to at least be slightly ahead of inflation.























































10% YOC in 10 years
10-yr Dividend Growth Rate (per year)Current Dividend
15%2.47%
13%2.95%
10%3.86%
9%4.22%
8%4.63%
7%5.08%
6%5.58%
5%6.14%
4%6.76%
3%7.44%
























































10% YOC in 12 years
10-yr Dividend Growth Rate (per year)Current Dividend
15%1.87%
13%2.31%
10%3.19%
9%3.56%
8%3.97%
7%4.44%
6%4.97%
5%5.57%
4%6.25%
3%7.01%
























































10% YOC in 15 years
10-yr Dividend Growth Rate (per year)Current Dividend
15%1.23%
13%1.60%
10%2.39%
9%2.75%
8%3.15%
7%3.62%
6%4.17%
5%4.81%
4%5.55%
3%6.42%


Due to the recent runup in the overall stock market there's very few consistent dividend payers that come close to meeting the stict 10% YOC in 10 years, but if you are early in your investment horizon you could use the 10% YOC in 12 or 15 years tables as another step in the filtering process of searching for dividend growth stocks.

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