Dividend Growth Investing

I think having dividend stocks is one of the most underrated ways to become financially independent at an early age. Or make your retirement in your 60’s much more successful.

I really enjoyed a recent post by dividendmantra.com and specifically enjoyed this quote…

“There’s thousands of publicly traded stocks out there. But, according to David Fish’s Dividend Champions, Contenders, and Challengers document, there’s only 543 businesses out there that have been able to raise their dividends for at least five consecutive years. Of that, only 106 have raised their dividend for 25 or more consecutive years. So you’re taking thousands of stocks out there and condensing that down into a few hundred or so. That makes research much more manageable.” Source: Dividend Mantra

I like this idea. Some people spend their entire lifetimes learning stocks. How to pick them, how to be a professional investor. It really is true however that the “proof is in the pudding”. A company that can pay dividends year after year is obviously being profitable year after year and it is a wise investment.

For instance, Cola-Cola has been around a long time, and Warren Buffet himself has mentioned that Berkshire Hathaway owns a large portion of Cola-Cola shares. Now you obviously need to do your own research, but this is the essence of value investing. Cola-Cola stock has a high value to it, and if you can buy the stock when it is relatively cheap because of some market movement, then you are getting it at a steal. On the flip side, even if you buy it at a relatively expensive price it is probably still worth it because it will still be valuable in the long run.