What Is Dividend Growth Investing? (2020)

After fooling around with many investment strategies trhoughout my 20’s I was tired of the incosistance of gains and the time involved with those strategies. I was searching and searching for a strategy that wouldn’t involve me checking my Robinhood app every day and having to keep up on the news about the companies I was investing in. It was at this point that I discovered the “Dividend Growth Investment” strategy and could not be happier.

What’s The Strategy?

The dividend growth investment strategy is a strategy in which a portfolio is built over a certain period of time with companies that pay dividends as well as concentrate on growth.

For example, lets look at Johnson & Johnson ( NYSE: JNJ). This is one of the most noted dividend growth stock that gets a lot of eyes. This company pays around a 3% dividend and has been increasing steadily in value for the past 100 years. This is a great company because there is not much volatility, they constantly increase their dividends and they grow at a steady pace.

Now lets take this example and apply it to today. If you bought $1000 of JNJ in 2015 at ~$100/ share paying a 3% dividend that would give you an equity stake of $1000 that pays you $30/year in dividends. Fast forward to 2020 and the value of your $1000 is now $1500 and pays you $45/year. We can see a 50% increase in our equity and an increase in how much the company pays in dividends. From this example it might not seem like crazy money but imagine if you constantly invested and accumulated more shares. Your gains would start to compound quite nicely.

Time Is Money, Baby!

Now that we an idea of the strategy we need to talk about one of the, if not the most crucial variable in this strategy. From the heading i’m sure you guessed it, it’s TIME. The longer you have the better and the sooner you start the richer you will be.

“If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes”

Warren Buffet

To get them most out of this strategy you have to be willing to invest today and not touch those positions for at least 5 – 10 years. Of the top 10 mistakes I’ve made investing in stocks, 9 of them were selling too soon on an emotional and impatient feeling.

How To Start Investing In Dividend Investment Stocks

If you feel like this is the strategy for you and want to get started then I would recommend using “Webull”. This company has great technology and offers 2 free stocks when you sign up. One of the barriers of the past were trade commissions, which lucky for us are all but gone. So there are other options that offer commission free trading. Some of those include:

• TD Ameritrade
• Robinhood

Once you’re set up on a trading platform, it’s time to research some companies and start your journey.