The strategy has three important components: dividend yield, dividend growth and time. To earn 11% yields and 12% average annual total returns, you need to invest in stocks with decent starting yields (usually 4% or higher) and strong dividend growth, and you need to stay invested for years. The higher the starting yield, the lower the dividend growth can be and vice versa. I caution investors not to go for the highest yields they can find. Companies with high yields can be very risky. We're aiming for quality companies that have long histories of raising their dividends every year and will very likely continue to do so. For investors collecting dividends in cash, they'll receive a raise every year. And if the companies boost their dividend by a meaningful amount, that increase should keep up with or beat inflation. Investors who don't need the cash right away should reinvest their dividends so that their investment compounds. The dividends will buy more shares, which will generate more dividends, which will buy more shares and so on... At some point in the future, if the investor then needs to collect the dividends instead of reinvesting, all of those additional shares that were purchased will result in a higher cash payout. Additionally, a company that is raising its dividend every year most likely has strong cash flows and growing earnings, which will result in not only higher payouts to shareholders but an increasing stock price. The numbers can get quite large. Ten years ago, I launched The Oxford Income Letter. I recommended Texas Instruments (Nasdaq: TXN). The stock has returned 564%. A month later, I recommended Raytheon Technologies (NYSE: RTX). It has returned 451%. That's the power of investing in Perpetual Dividend Raisers. It all comes down to this... If you want to make good money in the market, own quality stocks of companies that raise their dividend every year. It doesn't get much simpler than that. Good investing, Marc P.S. I'm not going to tell you to invest and then send you off into the world all alone. I just released my top dividend stocks for 2023. And you can get them completely free of charge. Click here to get my top five dividend stocks for 2023... at no cost to you. |
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