Stocks That Pay More and More

Buying stocks that consistently boost dividends is a smart move over the long run.

Growth-stock investors often look down their noses at dividends, which they consider a sign of a business that is past its prime. We don't agree. Buying stocks that pay a steadily rising dividend has long been a growth-stock strategy, and, we think, a good one.

We believe investors willing to venture back into the post-crash stock market should put dividend-raising stocks high on their list. A lot of great ones are selling at deeply discounted prices right now. In fact, dividend raisers offer the best of two worlds. These companies usually have steadily rising profits and prospects for more of the same. Plus, they offer a small measure of stability in these tumultuous times. Executives of these firms know their investors expect annual raises and that providing them is job one. "I view dividend payments as a long-term commitment by management," says David Ginther, manager of Ivy Dividend Opportunities fund.

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Contributing Editor, Kiplinger's Personal Finance