Tuesday, May 10, 2016

Dividend Compound Annual Growth Rate (CAGR) and Bumpiness

Dividend Compound Annual Growth Rate (CAGR) and Bumpiness

The best definition of Dividend Compound Annual Growth Rate (CAGR) can be found here: http://www.investopedia.com/terms/c/cagr.asp

The compound annual growth rate (CAGR) is the mean annual growth rate of an investment over a specified period of time longer than one year.

Essentially, the CAGR allows us to "smooth" out the percentages of the yearly dividend increases.

To save you calculating the CAGR for the CCC companies, head over here:

This is an excellent site!

For all the CCC companies, you can get historical information on the CAGR, and how “bumpy” the company has been. It is a measure of SWAN (‘sleep well at night’). I look for companies with low bumpiness over the long periods of time.

For example: Look for JNJ here - http://www.tessellation.com/dividends/JNJ.html
The low level of bumpiness since 1977 means that you should have slept like a baby.

The site also provides useful information on the dividend payment months, dividend histories since 1962 and other good stuff!

Check out http://www.tessellation.com/dividends/index.html when you have some time!

Of course, the site provides only historical information. As always, do your homework before any investments.  


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