Building a Dividend Growth Portfolio
Overview
A systematic approach to building a portfolio that generates growing passive income year after year. Learn the selection criteria, allocation, and maintenance process. Start your candidate search in the stock screener and model long-term projections with our portfolio calculator. For allocation ideas that balance yield and growth, compare ETFs vs index funds and explore broader investment strategies.
Key Takeaways
- Target 25-40 holdings across 8-10 sectors for proper diversification.
- Core criteria: 5+ years of dividend growth, payout ratio < 70%, reasonable valuation.
- Start with Dividend Kings (50+ years) and Aristocrats (25+ years) for the core.
- Add mid-cap dividend growers for higher growth potential in the satellite allocation.
Practical Tips
- Equal-weight your initial positions rather than concentrating in your best ideas.
- Reinvest dividends from your highest-yield holdings into your highest-growth holdings.
- Review every holding semi-annually: check payout ratio trends, earnings growth, and debt levels.
More Strategies Guides
Monthly Dividend Income Strategy
Most stocks pay dividends quarterly, but you can engineer monthly income by combining stocks with staggered payment schedules — or by using monthly-paying funds. Map your cash-flow calendar with a <a href="/tools/portfolio-trackers" class="text-primary hover:underline">portfolio tracker</a> and make sure each pick passes a <a href="/academy/dividends/payout-ratio-dividend-safety" class="text-primary hover:underline">payout-ratio safety check</a>. If you're planning for retirement, consider sheltering high-yield REITs inside an <a href="/retirement/alternative-ira" class="text-primary hover:underline">alternative IRA</a> to maximise tax efficiency.
Dividend Aristocrats — 25+ Years of Raises
Dividend Aristocrats are S&P 500 companies that have increased their dividend every year for 25+ consecutive years. They're the gold standard of income investing reliability. Use the <a href="/tools/screener" class="text-primary hover:underline">stock screener</a> to filter Aristocrats by payout ratio and sector, then check each candidate's financials with our <a href="/academy/fundamental-analysis" class="text-primary hover:underline">fundamental analysis</a> guides. Ready to put them to work? Learn how in <a href="/academy/dividends/building-dividend-growth-portfolio" class="text-primary hover:underline">Building a Dividend Growth Portfolio</a>.