Dividend investing is a great
strategy if you’re investing for the long term but you need to have a strong
focus on growth in order to gain a change of a return in the future. A
decreasing business has no chance to create values in the future.
Businesses that
have a long-term trend of growing earnings are businesses that become more
profitable and valuable over time. Sure, dividends can pay us while we hold on
to the shares of the business, but capital growth of the shares is nice to see
over time as well. And price appreciation is spurred by consistent earnings
growth. More importantly, though, as mentioned in tip three, dividends come
from earnings. So, earnings growth implies a safer dividend.
Earnings growth is
good but the company should also consider sharing this success with its
shareholder by paying higher dividends or starting a share buyback in order to
get money back to the owners of the corporate.
So, we want to
invest in companies that tend to grow their earnings, but it doesn’t make sense
for dividend investors if the company doesn’t increase its dividend.
After all, the
safest dividend is the one that was just raised. So, it benefits dividend
investors to look for companies that have a history of growing dividends. If
it’s already ingrained in the culture of the company to increase dividends each
year, they’re likely to continue doing so.
These are my 5 top
results...
