Dividend Growth Stocks - Financed by Equity Issuance?

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Dividend Growth Stocks - Financed by Equity Issuance?

edited

I noticed an interesting divergence between dividend growth and shares outstanding in the algorithm below. The algo filters Top 500 by market cap (then some additional filters for liquidity and nominal trade price). Finally it filters for companies that have reported nominal dividend growth over 150 trading days. I then compare these companies against the quantity of companies with a contraction in shares outstanding (which I label "buybacks"). It appears that in the final quarter of 2015, the trend for dividend growth remained stable, however the trend for share contraction bucked entirely. Very interesting.....

2 responses

Here is an update to this metric. Still a big gap between the quantity of dividend growth stocks and the quantity of those companies that are decreasing the supply of shares outstanding.

Update - I think the new Morningstar data was not populated when I originally produced these metrics. The correlation holds strong with this new backtest:

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The material on this website is provided for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation or endorsement for any security or strategy, nor does it constitute an offer to provide investment advisory services by Quantopian.

In addition, the material offers no opinion with respect to the suitability of any security or specific investment. No information contained herein should be regarded as a suggestion to engage in or refrain from any investment-related course of action as none of Quantopian nor any of its affiliates is undertaking to provide investment advice, act as an adviser to any plan or entity subject to the Employee Retirement Income Security Act of 1974, as amended, individual retirement account or individual retirement annuity, or give advice in a fiduciary capacity with respect to the materials presented herein. If you are an individual retirement or other investor, contact your financial advisor or other fiduciary unrelated to Quantopian about whether any given investment idea, strategy, product or service described herein may be appropriate for your circumstances. All investments involve risk, including loss of principal. Quantopian makes no guarantees as to the accuracy or completeness of the views expressed in the website. The views are subject to change, and may have become unreliable for various reasons, including changes in market conditions or economic circumstances.