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RE: What Is A Superior Dividend Grower (SDG)? | Dividend Growth Investing
An SDG is a company that pays a dividend which increases, on average, at the rate of 8%-10% per year for many years.
I have a question. How do you protect your portfolio In the event of a company that fulfills this condition but is an unknown fraud (I am thinking Enron) Would your models have picked up on the problem? I know a lot of people that bought into its amazing and fake numbers.
The reason I am asking is most frauds post excellent fake numbers and my number one priority in investing is to avoid fraud. Thanks
Thanks for answering! To answer your question: I would imagine that the deep dive required when digging into a company's financials and determining whether or not it is an SDG would also reveal any fraudulent activities. Also keep in mind that SDGs are the largest and most well-known companies in the world. They are regularly recognized brands and they are in a variety of sectors. Even if a company was ever revealed to be fraudulent, the portfolio would have so many diverse holdings that the 1 case of fraudulence wouldn't have a very significant impact. Hope that answers your question! Thanks for asking it!
Diversification is the only free lunch in investing they say : ) I completely agree that any investment requires a deep dive, that's why I only own 3 crypto's, I won't invest until I understand them and I am a slow learner!
Understanding and patience are key! Keep at it my friend!
Interesting question that I wanted to ask as well.
My personal view is to invest in well-regulated markets only, plus to invest in what I know well. Shops that I see on the street, brands that I buy, etc. Feels less dodgy than buying something I virtually know anything at all.
Curious to know what others think.
Exactly right. as I mentioned in my response, the companies that qualify as SDGs are well-known and well-respected - the largest in their respected industries and operating under very strict financial laws regarding information. Even still, our portfolio is very well-diversified over a variety of sectors and 1 outlier event wouldn't have much of an impact.
I agree that using a product is an amazing way to gauge an investment. I just avoid companies that make a good product but burn cash like its going out of fashion (thinking Tesla) By only investing in companies that are paying dividends then you can completely avoid cash burners
Exactly, companies who pay growing dividends over long-periods of time are those who have great cash flow management and are not going anywhere anytime soon.