September 21, 2012
The following video is part of our "Motley Fool Conversations" series, in which analyst John Reeves and advisor David Meier discuss topics across the investing world.
Income investors should not just look at today’s yield. Instead, they should think about what tomorrow’s yield could be. And to do that, investors should look for companies with dividends that can grow. Two examples are home-improvement retailer Lowe’s, and Corning. Both have relatively low payout ratios, so their dividends may be able to grow for quite a while. Of course, there are classic dividend payers like McDonald’s and Altria, which are interesting because they are still increasing their dividends. The one John and David think is most interesting is Nike. Here is a great company that’s very mature and continues to generate lots of cash flow. Its yield is 1.5% today, as the company continues to grow. But David would bet it will be paying out much more of its cash 10 years from now. That would be some solid dividend growth.
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