Dividend Investing Secrets
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I’m going to give you 3 dividend investing secrets.
Each one will help you make money.
And each one will help you protect your money.
These 3 secrets can give you a much better way to grow your wealth, even in markets that whipsaw like crazy.
Most investors don’t know these secrets. They don’t think this way. They just aren’t into dividend stock research.
(That’s why most investors don’t beat the market.)
Dividend Investing Secret #1
Keep it simple. Focus. All you need is a stock that gives you 3 things…
The best yield, the most safety, and the best prospects for dividend growth.
You don’t have to make it any more complicated. But you do have to know your stock.
To find out how to make sure your dividend stocks are giving you the best yield, the most safety, and a good shot at dividend growth, read my article…
Dividend Investing Breakthroughs.
Dividend Investing Secret #2
Sometimes, dividend stocks aren’t the answer, and you should NOT invest in them.
Even the best dividend stocks don’t always make sense. When?
If you need income right now.
And even if your investment horizon is less than 3 years.
You’ll do best when your horizon is at least 5 years, and ideally, 10.
Let me show you why.
Dover Corp. (DOV) is one of the best dividend stocks you can find. It’s been paying growing dividends since 1956.
It’s one of the Dividend Aristocrats. And it pays a 2.30% yield.
But let’s look at the stock’s performance over the past 3 years.
Let’s say you bought Dover in early 2012 and your plan was to hold it for a year.
Well, a few weeks after buying it, you would have looked on helplessly while Dover went down more than 10%. Talk about buyer’s remorse.
Then, after a year, you’d be feeling better.
But not by much. If you bought Dover in early 2012 and sold in early 2013, look what you would have missed out on.
Not to mention all the dividends.
Along comes the summer of 2014, when your investment had almost doubled. Let’s say you held on.
Even with the reversal, when Dover slid back into the 60s, you would have been in great shape.
Look. All of us have beat ourselves up for not selling a stock at its high.
Hindsight is indeed 20/20. And timing the market is easy.
As easy as hitting a changeup from Hall of Fame Pitcher Pedro Martinez.
Don’t expect it to happen.
Give yourself a break from both buyer’s remorse and seller’s remorse. Hang onto your top dividend stocks for at least 3 years. And as you’re about to see, hang on even longer if you can…
Dividend Investing Secret #3
Compounding is even more profitable when you unlock its power to reinvest dividends.
You invest in a stock that pays a 4.5% yield. You don’t take the dividend as income, but reinvest it. You plow the dividend payments right back into buying more stock.
Every year, it increases the dividend by an average of 10%.
Not 10% a year, but an average of 10% a year for 10 years. Some years are better than others.
This means at the end of 10 years, your stock is yielding 10.6%. That’s what compounding does. And when you break out the math, you’ll see that year 8 is when the compounding juices really start to flow.
Is Time On Your Side?
That’s what you want to be asking yourself if you’re looking at investing in dividend stocks.
These 3 questions can replace dividend stock confusion with clarity…
- When do you need the money your dividend stocks will make?
- How can you set up your portfolio to take advantage of the power of compounding dividends?
- Can you reinvest the dividends instead of taking the cash?
So ask these questions. They’ll help steer you in the right direction.
Like James Thurber said…
“It is better to know some of the questions than all of the answers.”
Use the 3 dividend investing secrets I’ve revealed.
You’ll dodge the dangers and do a lot better with your stocks.–
Regards,
Michael Jennings
Note: Michael Jennings writes and edits DividendStocksResearch.com. Sign up for our free dividend reports and dividend newsletter at https://www.dividendstocksresearch.com/free-sign-up. We’ll show you how to create regular income by investing in dividend stocks, easily, step-by-step.
Category: Dividend Basics
