Dividends4Life: Dividend Growth - A Very Useful Distraction

Some research and anecdotal observations on portfolio returns had me wondering "is dividend growth just a useful distraction"? Dividend Growth is a wonderful style in that it asks investors to focus on the yield and the potential for their companies to increase their yield over time, and mostly year over year. Reacting to drastic price movements of stocks or equity funds is the greatest failure of most investors. It is the reason why so many investors underperform the markets, and leave hundreds of billions of dollars on the table. If an investor can learn to ignore price swings, that is a wonderful gift. Dividend growth investing is then an amazing risk management tool at its core. And mostly certainly, it allows investors to grow their income in a reliable and lower risk manner, as compared to purchasing the broader market, or by diving into specific sectors.

For investors with a long time horizon, dividend growth still might be a very useful distraction and risk management tool at its core. But by looking the other way, dividend growth investors who stay the course just might get that added surprise of a total return outperform. When it comes to creating a generous income stream and a growing income stream - there's certainly more than one way to skin a cat.

Source: Seeking Alpha

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