That higher yield correlates to greater long-term total return potential. All else equal, a lower price will result in a higher yield. Price and yield are inversely correlated. This is relative to what the same stock might otherwise provide if it were fairly valued or overvalued. See, price only represents what you pay, but it’s value that represents what you get.Īn undervalued dividend growth stock should provide a higher yield, greater long-term total return potential, and reduced risk. Investing in the right businesses at the right valuations is key. Suffice it to say, living below my means and investing in simple-to-understand but high-quality businesses was a big part of my success. My Early Retirement Blueprint explains exactly how I was able to retire so early in life. That’s my real-money portfolio, and it produces enough five-figure passive dividend income for me to live off of.ĭividend income has been covering my expenses for years now, which allowed me to retire in my early 30s. I’ve been keeping it simple by buying high-quality dividend growth stocks for years. Generally speaking, these are the easy-to-understand, highly visible products and/or services that we all commonly use. This reliable, rising profit is produced when a business is selling great products and/or services. We’re talking about dividend growth stocks.Ī dividend growth stock represents equity in a business that pays its shareholders reliable, rising dividends.Īnd how do reliable, rising dividends get funded? This list has compiled invaluable information on hundreds of US-listed stocks that have raised dividends each year for at least the last five consecutive years. You can find many of these businesses on the Dividend Champions, Contenders, and Challengers list. Indeed, some of the world’s very best businesses are very easy to understand. The legendary investor Peter Lynch looked for business models that could be boiled down into a crayon drawing by a child.Īnd if it’s good enough for one of the greatest investors of all time, it’s good enough for the rest of us. Truth be told, it’s better to keep it simple. People new to investing think that the big returns can be found in risky, complex areas of the market. There’s a natural tendency to assume that complicated must be good. Becoming a successful investor can be, in some ways, counterintuitive.
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