My $100,000 Bet on Dividend Growth 💰
Making $1,000 a Year in Dividends (But Choosing Not Too) 🤔
My dividend portfolio just hit $100,000!
It’s a huge milestone for me.
What’s interesting is that I could easily be making $12,000 a year in dividends with a 6-figure portfolio if I invested in the right stocks/funds.
But-
I’m currently making around $4,000 a year in dividends ($340 a month).
And while it’s tempting to earn the amount of a brand new iPhone every month…
Dividend growth stocks will provide more dividend income long term.
The math behind this is simple:
If company A uses all its free cash flow to pay out dividends to investors…
They won’t have any money to reinvest back into the business for growth or innovation, making it impossible for them to increase their dividend payments in the future.
Or worse… They’ll decrease dividend payments to make ends meet.
Whereas if company B only uses 20-40% of its free cash flow to pay out dividends…
They can re-invest the difference into growing the business.
In turn, generating higher free cash flow the next year.
This higher cash flow means they can increase dividends to the investor (aka YOU).
And if they continue with this strategy next year, and the year after that, and so on…
The compounding effect starts to kick in and your dividend payments continue to increase.
If you don’t believe the logic, just look into Warren Buffett's investment in Coca-Cola.
The process I’ve just described is exactly what allowed him to land a yield on cost of over 50%! (Wow!!)
To put into perspective just how insane a 50% yield on cost is…
That’s the same as getting paid $500 every year from a one-time investment of $1000.
These are truly insane numbers!
But that’s the power of dividend growth investing.
The compounding effect over time slowly but surely tip the odds further in your favor.
And ultimately gets you to your end goal.
Financial freedom. 🔥
P.S. Whenever I show screenshots of my dashboard or spreadsheets, I always get asked, “Where can I get them?”
In order to save time, I’ll just leave the link to them here in case you want to use them!
Happy dividend investing! 💰