Most casual income investors focus on current yield, which is important. However, if your objective is to build a portfolio of securities with increasing income, then Yield on Cost is an excellent metric to measure your progress.

Dividends from a quality, well-diversified portfolio are much more predictable than capital gains and good companies routinely raise their dividends well in excess of the inflation rate.

The main focus of dividend investing is finding and buying stocks that will continue to raise their dividends in the future. In making this determination there are many factors to consider such as dividend payout ratio, debt levels, the company’s dividend policy and track record.