What is Dividend Growth Investing?
Dividend growth investing is the act of investing for dividend income and capital appreciation. The goal is to seek out businesses that have a strong track record of rewarding shareholders through dividend payments. The core of dividend growth investing is to invest in multiple businesses that will sustainability increase dividend payments over time.
To become a dividend growth investor, you must put in the time and effort to learn some key principles. You will need to do investment research. Once you have the proper knowledge, you can accumulate wealth by means of compound interest and dollar cost averaging into a dividend growth stock portfolio.
In developing a solid dividend growth investment strategy. You need to understand what makes a good dividend growth stock. Dividends are an important factor of the value of a stock. A company that increases its dividends yearly most likely means they are also growing their earnings too. So it is important to look for companies that raise dividends year after year, have stable business models, quality balance sheets, and increasing cash flow.
Benefits of Dividend Growth Investing.
Dividend growth investing will result in a form of passive income that when the capital reaches a large enough sum dividends will be self sustaining. This will in turn lead you down a path to financial freedom. You will be able to follow your life’s passion, switch to part time work, or even enjoy an early retirement lifestyle.
To enjoy the full benefit of dividend growth investing it is highly recommended to follow a few guide lines.
Find ways to increase you current income. It is important to not increase your cost of living to match your new income or even with the increase to your income investment contributions will not increase.
Invest your money on a monthly, bi-weekly, weekly or even daily basis. By contributing income to your portfolio on a frequent basis you are fully optimizing compound interest and dollar cost averaging. All of the small dips in the price of the stock will add up to significant value over time.
Reinvest the dividends. This leads to an increase in dividend income. At the same time, your prior investments are increasing their dividend payouts percentages. The end result is your interest is now earning interest This cycle significantly magnifies dividend yield over time.
Is Dividend Growth Investing for you?
Dividend investing is a waiting game. The pay off is an increase of income that can lead to financial freedom. If done correctly dividend investing will pay off by letting you live completely from frequent dividend deposits into your account