7 Reasons Dividend Growth Investing is For You

You may have heard the term passive income before. However, you may not truly understand the meaning or effect that it can have on your life. Usually, when the words passive income come up in conversation, people are talking about dividends.

Dividends are the most passive of passive income. Once you set up your portfolio, you can leave it alone for the most part. However, you should gain a deep understanding of the stock market, blue-chip companies, and market cycles along the way.

I consider there to be three ways to invest in the stock market for income. These methods are index fund investing, dividend growth investing, and income investing. Today, I will focus on dividend growth investing. Don’t worry; I will cover the other two options later.

The Magic of Passive Income

I recommend you download my free book “The Magic of Dividend Growth Investing” before continuing forward. This book will give you some insight into the ideas I talk about below. With that, let’s continue with the seven reasons DGI is for you. 

1) Passive Income for the win. First and foremost, dividends provide us with passive income. In general, passive income allows us to make money without trading our time. The only way to become rich is to make money while we sleep. It’s no wonder the average millionaire has seven streams of income. 

Dividends are an essential portion of our passive income portfolio. As we earn money from various sources, we want to fund our money machine. Eventually, we can stop working, sell our properties and businesses, and live off our dividend income. Of course, you can choose to keep all of those things—and enjoy your mega income. 

2) Income can change your life. The only way to have a great retirement is to have a steady stream of income. And no, social security does not count. Social security is a fixed income that we cannot control.

Don’t Gamble with Retirement 3

With a DGI portfolio, we have a growing dividend payout. These blue-chip stocks increase their dividends annually so that we can keep up with inflation. Having a happy cash flow retirement gives us options on when to vacation, see our family, and eat out with friends. Money is not a limiting factor in the decisions we make. 

I currently make $700/month of passive income from investments and royalties. I am 40 years old. Can you imagine what this income stream will look like in 25 years when I am 65 years old? What a fantastic dream, right?

3) Capital gains as a backup plan. A great benefit of investing in DGI stocks like McDonald’s (MCD) and Starbucks (SBUX) is that they also increase in share price and annual dividend payouts. 

So, if, for some reason, we need to sell shares, we will have nice capital gains to assist us through life moments. With DGI, we are getting capital appreciation, increasing dividend payments, and the compounding effect. DGI is one great way to build a safe income stream and also prepare for a long retirement. 

Preferred Shares 101: Getting Started with Preferred Shares

4) You’re in control. The real fun of a DGI portfolio is when you stop dividend reinvestments. At that time, you can take your income and enjoy your life. But, you don’t have to take all of your dividends.

You can take a percentage of your dividends in cash and reinvest the rest back into the portfolio. That means that we will be using the income to fund our lifestyle AND still growing your portfolio. How amazing is it to grow your portfolio during the retirement phase of your life?

5) Can leave it to your family. You will work for years building a great DGI portfolio, full of income and capital gains, but what’s next? You can simply leave it to your family. Your DGI portfolio will be life-changing to your heirs. 

All they would have to do is add some newer dividend payers to go along with Coca-Cola (KO), Pepsi (PEP), and Johnson & Johnson (JNJ). Not many people get the chance to leave a legacy to their children; you may as well be one of the ones that can change a life. 

6) You love your companies. There are two amazing recurring moments as DGI investors. First, the minute you receive a dividend because there is nothing like receiving a dividend. Dividends are guilt-free money that can change your entire outlook on life. 

The Velocity of Money: And How it can Make Your Rich

Second, the day your companies announce a dividend increase. Listening to the annual shareholder meetings and earning reports is always a blast. Then comes the moment of the annual dividend increase. You are getting a pay raise with no additional work required. 

Because of these two moments, you begin to love the companies in your portfolio. I find myself buying more Johnson & Johnson products. I also love shopping at Target (TGT) and Walmart (WMT) because I own their stocks. You will truly become passionate about these companies because you want them to succeed. 

7) Keep you abreast of future developments. As you listen to the earnings statements, you stay abreast of the future progress of your companies. These future developments can help you make investment decisions in other parts of your overall portfolio.

For example, McDonald’s collaborated with Beyond Meat (BYND) recently. If you didn’t know anything about meat substitutes, you would now have some information to start your due diligence. As your companies mature, they will have to navigate new ideas and concepts. 

Keeping up with your companies will make you a more well-rounded investor and may lead to gains in other aspects of business or investing. The more you read and understand, the more you will grow and succeed.

How Would You Invest $300,000?

Conclusion. These were just a few quick reasons why DGI investing is for you. I know it is hard to get started, especially since you may not know how to construct your portfolio. I think I will write a series on how to build a DGI portfolio next. 

Dividend Growth investing is a new concept to most mainstream investors. It may take a while to understand that the stock market doesn’t have to be a gambling machine; it can be a safe haven. I would wager to say that DGI is less risky than leaving your money in the bank savings account earning 0.01% interest. 

If DGI is something you want to try, you can start with my book “The Magic of Dividend Growth Investing” and continue to a more in-depth look with the book “Dividend Growth Investing.”

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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it.  I have no business relationship with any company whose stock is mentioned in this article. All Right Reserved Military Family Investing