The Right Ingredients Can Make Something Rise

One of my first jobs after my time in the US Navy was at a company called Universal Foods. UF had several divisions in the 1970’s, and one of them was Red Star Yeast ®. The essential ingredients to have bread or other baked items rise is to have yeast and something to feed the yeast so that the yeast can create carbon dioxide bubbles.

In the same way, a dividend-paying ETF must have the right ingredients to cause the dividends to rise over time. The key ingredients are the stocks of good-to-great companies with rising dividends. That is one reason I like ETF’s like SCHD, VYM, DVY, DGRO and sector funds with similar characteristics. The ingredients in an ETF matter. The key ingredient is a diversified portfolio of stocks.

One of the reasons I look at rising dividends every trading day is to see which of my stocks had an increase in their dividend. Some days there are none, but other days there is a treasure to be seen. For example, on Tuesday, six of our companies increased their dividends: ADI, GPC, NHI, PEG, WMT and WM.

Extract from the Wall Street Journal free data site.

ADI, GPC, PEG, WMT and WM are all in ETF VYM. I also own shares of VYM, so I will reap the benefits of these dividend increases by simply owning VYM. You can to. It isn’t hard to do.