Guide to Dividend Growth Investing
Introduction
I want you to close your eyes in a minute. But, first think about your happy place. The place that helps you replace your worries with a sense of calm. It could be on a beach in Hawaii sipping a Mai-Tai or lounging on a hammock reading your favorite Stephen King novel, or for the more adventurous it could be powder skiing in Whistler. Whatever it is I want you to close your eyes now and imagine yourself there.
What is your happy place?
What's your happy place?
What's your happy place?
Ok, thanks for indulging me.
Now, I want you to imagine yourself in your happy place, but this time imagine being paid while you find your escape from everyday worries.
Sound far-fetched? If you are feeling a little skeptical, good - you should be. If you are not the least bit skeptical about the prospect of earning money without having to work, all the while affording your personal slice of paradise; I feel like I need to remind you – there are no free lunches.
While there may be no free lunches in life, I want to share with you a long but dependable path to realizing the dream of having the financial freedom to savor the people, experiences and things in life that give us the most joy.
What is the path to this dream? It’s passive income - a stream of income earned with little to no effort. Of course, most passive income streams require some upfront effort – it’s just once you get over this setup period, your effort should be quite minimal to truly qualify as passive income. While there are several valid options for generating passive income, including real estate or having a side hustle, my focus with this article is on dividend investing. A passive income stream that you might call an obsession of mine, dividend investing is very accessible, and it does not require the responsibility of being a landlord or starting a small business on the side. Dividends also have a long track record of providing an annual raise. Over the last 58-year S&P 500 companies grew their dividends at a compounded annual rate of 5.8%[i]. How about that, a steady raise without having to work harder or longer!
This is just one of the many magical compounding effects dividend investing can bring to your portfolio, turbo charging your passive income streams and returns. In this guide I will show you how to put the superpowers of dividend investing, such as re-investment, growth and relative yield to work in your portfolio, improving your return by 65% (see Dividend Income Snowball section).
One of the side effects of reading this guide may be a growing obsession with dividends. By the end of this guide you will love dividends like I do. I will cover the basics of dividend investing, how to evaluate and select the right dividend paying companies, and a blueprint for building a dividend portfolio that over time can become a significant passive income stream.
[i] https://www.fool.com/investing/2018/07/26/how-to-build-a-dividend-portfolio.aspx, How to Build a Dividend Portfolio