The "strategy" works with hindsight, which is always perfect. I notice, for example, the author didn't chart the bear market in the Global Financial Crisis when dividends got slammed. Even the highest quality dividend generators often at least stopped hiking dividends during that period.
We've had a terrific bull market, and the U.S. markets are trading at or near record highs right now. Practically everything looks wonderful at the moment, including dividends, assuming you took long positions well below current valuations. I remain long-term bullish -- and by "long-term" I mean at least a few presidential terms -- but I have to expect one or more corrections, maybe big ones, along the way.
Dividend-oriented trading strategies are very, very old. There are even funds available that play those strategies. Some are actively managed, and some are passively managed index funds. Symbol VYM, a Vanguard ETF, is an example of the latter. I remember my grandfather buying and holding a few high quality electric utility stocks, decades ago -- a classic form of the same basic dividend-oriented investing. Do keep in mind that Singaporeans pay 30% tax withholding on U.S. dividends while even the highest income U.S. investor currently pays a maximum of 23.8% (assuming qualified dividends, which these are, and usually with a couple months of "float" to boot since they aren't subject to withholding). If the Republicans manage to gut the U.S. healthcare system then U.S. investors will probably get a 20% or lower top rate -- and some thousands of people per year will die earlier, but hey, small price to pay for a tax cut, right?
. The 30% treaty rate is extremely unlikely to change. To net it out, Singaporeans are at a bit of a disadvantage playing the dividend game. Singaporeans would tend to prefer stock buybacks since Singaporeans don't pay capital gains tax, so if you want to play this particular game I'd play it in slightly modified form, looking for shares or funds that focus on companies aggressively buying back their shares.
Now, the last time I looked at somebody's analysis of that cohort of companies (those with aggressive stock buybacks) it appears such companies underperform the market as a whole. The hypothesis is that such companies don't see worthy investments in their own futures -- new products, workforce development, expanding into new markets, etc. -- so instead they buy back their own stock. And thus if they're less innovative than other companies then they won't grow their businesses as much.
Another problem the author didn't directly mention is that you can find "firecracker" dividend stocks -- stocks that are paying amazing dividend yields. The problem is that they're burning through cash, and sometimes even borrowing, to pay those dividends. It's kind of like taking your whole savings, and maxing out your credit card, to throw a big beer party. So you have to look deeper to figure out whether the dividends and stock buybacks are sustainable. The stocks the author picked are probably all high quality in that sense, but I think he should have mentioned that issue more explicitly.
