rewrite this title and make it good for SEODividend Growth Bi-Weekly Chat 08/04/2025

Welcome to the forum for Dividend Growth Investing discussion on Seeking Alpha. A new article is posted every two weeks as a space for sharing of ideas, discussing concepts, and digging deeper on DGI. All previous blogs are listed in chronological succession on the main chat page.

As promised and with your valued feedback, we are publishing a new version of the article with some changes to make it more engaging. The structure of the article will now include a response from one of you in the community regarding your thoughts on DGI.

If you’d like to share your DGI thoughts with us in future editions, you can email us at moderation@seekingalpha.com and let us know. We’ll be looking at continuing to do this moving forward.

For a reminder, you can find our moderation guidelines for this space in our profile. And please share your thoughts below to continue the discussion and learning on DGI.

More on Dividend Growth Investing:

Year-to-date, my Top 15 list has a return of +8.75%, compared to +5.22% for VIG and +8.14% for SPY. Dividend investing is not a sprint but a marathon and not every month will go according to plan. The goal for the Top 15 High-Growth Dividend Stock list isn’t to beat SPY or VIG, but to generate a long-term rate of return of at least 12%. Following June, the watchlist was within inches of this goal, but the poor results in July set the long-term performance back again. The top 15 dividend growth stocks for August 2025 offer an average dividend yield of 1.20%. Collectively, they have increased dividend payments at a rate of 21.62% during the last 5 years. Based on dividend yield theory, these 15 stocks are about 26% undervalued right now, and I think they are poised to offer strong long-term returns.

Admittedly, I (as an income-oriented dividend growth investor) am biased. I am more prone to see AI as a bubble because of the recent underperformance of my distinctly tech-light portfolio. That said, stock bubbles are very common during periods of rapid technological advancement. Think of the railroad mania in Britain in the 1840s, the post-war railroad speculative mania in the US in the late 1860s and early 1870s, the pre-Great Depression stock bubble of the 1920s, and of course the Internet bubble of the late-1990s. One does not need to deny the revolutionary and productivity-enhancing nature of the new technology to see its associated stocks as being in a bubble.

Many investors like targeting high-yield fixed-income funds because they can enable them to significantly accelerate their retirement timeline. This is because, while many retire off of the 4% rule, if you can generate a yield twice that amount from cash flow that comes from relatively predictable sources such as fixed income instruments, you can likely live off of a much higher percentage of your principal than just 4%. Moreover, if the funds you invest in pay out monthly distributions, it makes matching your passive income to your expenses even simpler. Of course, the trick here is making sure that your cash flow is sustainable over the long term. That makes assessing the quality of the high-yielding fund very important. With that in view, in this article, I am going to compare two high-yielding fixed income monthly pay funds that yield between 9.5% and 13.8% and explain why I think one is a buy right now and one is a sell.

Agency mortgage REIT Dynex Capital (DX) reported Q2 numbers. Optically, the numbers weren’t great as leverage increased to 8.3x and book value fell 5%. However, the company continued to issue common shares. This doesn’t help book value (as the common share count increases), but it does increase the amount of equity that stands behind the preferreds (because the preferred share count is unchanged). Common equity increased from $1.28bn to $1.5bn as a result of $280m of at-the-market issuance – a massive 22% increase in equity. And so, despite book value falling 5%, equity/preferred coverage increased by 17% to 13.4x from 11.5x. The chart below shows the trend in common shares outstanding; the recent uptrend is a great result for preferred shareholders.

Seeking Alpha’s Disclosure

Past performance does not guarantee future results. Content is provided for information purposes only and does not constitute investing advice. Any views or opinions expressed do not reflect those of Seeking Alpha as a whole. Seeking Alpha does not take account of your objectives or financial situation and does not offer any personalized investment advice. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank.