I am setting out to prove whether high yield investments can keep up with dividend growth stocks for the long term. There is a constant flow of articles on SA not only about the power of compounding via dividend growth investing ("DGI"), but also the simple fact that DGI may provide protection (oftentimes completely) against inflation; if your income is growing at a faster rate than inflation, you will actually be "richer" notwithstanding the increased cost of living. On the other hand, even if you were to hold a high yield investment, it may be suffice for the time being, but in a few short years, inflation will eat away at the benefit of your holdings.
In conclusion, although I don't think either side clearly "won" because there are too many fact-sensitive issues to consider in each person's situation, there is a certain power to DGI which I am only recently beginning to realize. It's not just compounding; it's compounded compounding! It's a breathtaking concept, in my opinion, and it's certainly going to occupy a large space in my portfolio in the coming years. High yield is the ultimate goal, and now I know of 2 ways to get there.
Source: Seeking Alpha
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