Cyclical industries are where dividends go to prove themselves. Anyone can pay a dividend when demand is booming, credit is loose, and customers are spending like it’s 2006. The real test comes when: Volumes drop Pricing power evaporates Fixed costs loom And management starts using the phrase “temporary headwinds” Cyclicals don’t just fluctuate. They swing. And when they swing, margins compress. When margins compress, cash flow thins. When cash flow thins, dividends get nervous. So the real question for serious investors isn’t: “Does this company pay a dividend?” It’s: “Can this company maintain margins when the cycle turns?” Because margin stability is the foundation. Dividend resilience is the outcome. Understanding Cyclical Industries Let’s define the terrain. Cyclical industries are those whose revenues and profits move meaningfully with economic cycles. Think: Autos Industrial machinery Basic materials Semiconductors Airlines Homebui...
If you’re serious about dividend growth investing — not the flashy “yield-chasing because it feels productive” version, but the disciplined, compounding-machine version — then you eventually run into a hard truth: Anyone can raise a dividend once. Twice? Still easy. Three years? Respectable. Ten straight years? Now we’re talking about durability. The 10-Year Dividend Test isn’t a meme. It’s not a buzzword. It’s a filter — and a surprisingly ruthless one. It’s designed to answer one question: Can this company raise its dividend through multiple economic cycles without breaking character? Because anyone can look brilliant in sunshine. The real test is whether they can keep paying you more when it rains. Let’s build this framework properly. Why Ten Years Matters Ten years is long enough to include stress. In most decades you’ll get: At least one recession scare One market correction Sector rotation Margin compression Interest rate changes Political or regul...