I caution investors not to go for the highest yields they can find. Companies with high yields can be very risky. We're aiming for quality companies that have long histories of raising their dividends every year and will very likely continue to do so. Investors who collect their dividends in cash will receive a raise every year. And if the companies boost their dividends by a meaningful amount, that increase should keep up with or beat inflation. (As you probably know, every Wednesday in my Safety Net column, I evaluate the safety of a company's dividend and walk you through how I arrived at my rating. Be sure to check it out if you haven't already.) Investors who don't need the cash right away should reinvest their dividends so that their investment compounds. The dividends will buy more shares, which will generate more dividends, which will buy more shares and so on... At some point in the future, if the investor then needs to collect the dividends instead of reinvesting, all of those additional shares that were purchased will result in a higher cash payout. Additionally, a company that is raising its dividend every year most likely has strong cash flows and growing earnings, which will result in not only higher payouts to shareholders but an increasing stock price. The numbers can get quite large. Eleven years ago, when I launched The Oxford Income Letter, I recommended Texas Instruments (Nasdaq: TXN). We ended up selling the stock in October 2023 for a gain of 430%. A month later, I recommended RTX (NYSE: RTX), formerly known as Raytheon Technologies. It has returned 463%. That's the power of investing in Perpetual Dividend Raisers. It all comes down to this... If you want to make good money in the market, own quality stocks of companies that raise their dividends every year. It doesn't get much simpler than that. Good investing, Marc P.S. I've put together a compilation of five of my favorite dividend stocks for you. All five either have made money for my readers in the past... are currently making money for my readers... or both! Go here to get all the details. |
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