“Do you know the only thing that gives me pleasure? It’s to see my dividends coming in.”-John D. Rockefeller (American Industrialist and Philanthropist, founder of the Standard Oil Company, 1839-1937)
I saw this quote on twitter (follow me @startingfrzero) recently and thought it would make for a great post on dividend growth investing. The greatest thing about dividend growth investing, as opposed to other strategies, is that its results are obvious right from the start.
What do I mean by that? With dividend growth investing, after a relatively short period of time owning these stocks you get to see the results when the dividend checks start coming in (or depositing in your online account nowadays). Once you receive them they can’t be taken away. Contrast that to a growth based, total return strategy where although you may see large gains on paper quickly, they can disappear quickly in a market downturn. In a market downturn those with a total return strategy are more inclined to sell low to limit future losses and preserve capital.
Dividend growth investors on the other hand welcome market downturns so they can pick up more income producing shares in some of the most successful companies in the world. As long as the earnings power behind the companies is not negatively affected by economic downturns, bear markets just give us the opportunity to pick up more shares at bargain prices.
Then you can sit back, stop worrying about things like the Fed’s interest rate policy and which hot stock is going to the best performer over the next year and just enjoy watching those dividends come in.