What Is A Dividend Growth Stock Portfolio?
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Building off of Wednesday’s Juice where we discussed growth-oriented tech stocks that pay dividends as well as our longstanding education and coverage of dividend investing, today, we do one of the things that The Juice does best. We tie it all together. By giving you a handful of investment ideas alongside the basic information you need to know about the associated strategy. Dividend growth investors buy and hold stocks that have a history of increasing their dividend payments. You can collect dividend income as cash or reinvest it for additional shares of stock.
At some point, you might be able to collect dividend payments as cash to cover some or all of your living expenses. This requires a significant nest egg. Something we will cover again in a future Juice.
Not all dividend stocks fit into the same category, which is a great thing. And, as you’ll see, it’s part of the point we made in yesterday’s Juice. There’s no reason to freak out when a high-growth, high-tech stock starts paying a dividend. Including these companies in a dividend growth portfolio can provide not only diversification, but a somewhat aggressive edge that we think will be sustainable over the long-term. To start, many dividend growth investors look for stocks with long track records of increasing their annual dividend payments. They measure these streaks in consecutive years and tend to covet a group called dividend aristocrats. |
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Dividend aristocrats are companies that have increased their dividend payment, every year, for at least 25 consecutive years. Right now, there are 66 dividend aristocrats, including the following three that we would include in most long-term portfolios that seek a healthy mix of growth and income.
All three stocks generate super reliable income. And, when they take hits, they bounce back because they’re engines of the U.S. economy. And, in some cases, companies that provide necessities for the American consumer. For example, there has been some pessimism around MCD. In mid-summer, MCD dropped below $250. Now it’s trading around $300 not far from the 52-week high it recently hit. Ignore the headlines and buy MCD. As The Juice noted a few weeks ago, do likewise with LOW because— As the housing crisis intensifies, it will actually be good news for Home Depot and Lowe’s. The people who waited to sell will end up making improvements in their new home. Because they’ll need someplace to live and might be accommodating a growing family. The people who waited to buy — likewise. We generally don’t like weak stocks with good dividends. This is an exception. Because HD and LOW have merely taken breathers. So this is a good opportunity to buy the stocks cheap and enjoy the dividend income (reinvest it!) while you wait. These stocks are pillars of the stock market as well as a dividend growth portfolio within which you want stock price appreciation and reliable income. But here’s the thing — you want to stock the other half (or, at least, a section) of any solid dividend growth portfolio with future dividend aristocrats. And you can do this by owning many of the big names — the high flyers in tech — that you know and love. Including the stocks we touted yesterday with more than enough cash on hand to fund their current dividend payouts and increase them annually on the way to dividend aristocrat status and beyond.
Is there anybody in their right mind who doesn’t think these four names will not be blue chips with upside and 25 year-plus dividend increase streaks two, 12 and 25 years down the line? The Bottom Line: We didn’t think so. If you’re a dividend growth investor, rejoice that you can own PG, MCD, LOW, MSFT, AAPL, META and GOOG. These are stocks that build wealth and that you own for life. Every one of them has gone up over time — often in a big way — alongside growing dividend payments that can generate handsome investment income. Just how handsome? We’ll quantify it for you next week in The Juice and discuss how many shares of these stocks you need to own to have enough income coming in to make a difference in your life. As in your budget. Your pocketbook. |
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Proprietary Data Insights Top Dividend-Paying Stock Searches This Month
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