Dividend growth investing has been my preferred method of investing for the last 10 years. I specifically want dividend growth companies in my portfolio rather than just dividend payers. These are the companies that can increase dividends over the long haul at least 5% per annum or more. There are 10 key things for me that make dividend growth investment my strategy.
1. Capital preservation - Not losing any of my investment capital is my Rule No 1.
2. Accelerated independence - Aim of becoming financially independent by my 40s.
3. Dividend growth stocks create wealth - Dividend growth, leads to an increase in wealth.
4. Dividends provide a major contribution to total return - close to 50% of the total return.
5. Tax advantaged - Dividend income is tax advantaged versus earned income.
6. Invest in markets without needing fresh capital - Dividend income ensures new investments.
7. Keep pace with inflation - I want a real return on my income.
8. Good corporate discipline - I expect companies to pay growing dividends.
9. Early warning signals - Slowing dividend growth provides an early warning signal.
10. Reduced impacts from stock volatility - Dividend income allows me to ignore market fluctuations.
Source: Seeking Alpha
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