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The Dividend Investor: A practical guide to building a share portfolio designed to maximise income by Rodney Hobson

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Chapter 8. Progressive Dividends

Now this does matter, and it matters very much. We want companies with what is known as a progressive dividend policy, that is the dividend is increased year by year. This means that our income will rise to offset inflation.

You need to check back over the past five years to see whether a company has been increasing its profits, its earnings per share and its dividends. Generally speaking, these three figures will go hand in hand over time. Higher profits translate into higher earnings per share – as the larger cake divides into larger slices, and as earnings per share rise, the scope for raising the dividend increases correspondingly.

This will not be an exact correlation. Profits do not rise in a steady ...

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