Dividend Growth Investor Dividend Growth Investor I will share my journey with you on my quest for achieving a sizeable passive income stream. I would achieve that by investing in dividend paying stocks which have the tendency to consistently increase their payments year over year.
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Why dividends matter?
2008-01-20 05:59:00 Jonathan from MyMoneyBlog had a pretty good article about why Dow Jones Industrials is not an accurate index to follow. He sites this research paper named The Dow Jones Industrial Average: The Impact of Fixing Its Flaws. Basically this paper shows that if dividends were included in the Dow Jones Industrials, its value would be around 250,000 points in 2000, versus the 9,000 it was trading in 1999!It is commonly known that it took the market 25 years to recover from its 1929 peak and the Great Depression. However the inclusion of dividends in the index mitigates the effects of the Great Depression. A new all-time high is reached in January 1945 instead of November 1954 if dividends are included.To summarize, dividends should be considered an important part of ones portfolio. Financial advisers normally tell you that when you retire, you would be taking a 4% withdrawal rate from your nest egg each year. However, if you can achieve at least a 4% yield, that grows each year to at leas... More About: Dividends , Matter
Why dividends?
More articles from this author:2008-01-19 22:32:00 I believe that creating a passive income stream through dividends is an achievable, intriguing and stimulating way to decrease my dependency on the salary income, which is over 95% of my income at the moment. The remaining 5% comes from interest income from CD's and my interest checking account at Schwab, credit card rewards and signing up for offers online. After doing some research, i have found that putting your money in bonds, cds and money market funds will only be enough to meet inflation and over long periods of time exceed it by a couple percentage points on average. Stocks on the other hand offer you the best possible investment opportunity out there. Over 30-35% of stocks performance over the past 50 years has been attributed to dividends; the rest comes from capital gains. If you take a look at the S&P 500 from 1957- 2005, the dividends have grown on average of 5.3% per year for the index. A $1000 investment in the S&P500 in early 1957 would have provided you wit... More About: Dividends 1, 2 |
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