You might have guessed it, but over here on Dividend Talk, we focus on a strategy known as Dividend Growth Investing. In simple terms, Dividend growth investing is a time-tested strategy that can help you unlock your financial freedom.
While Both European DGI and EMF (Derek) are still on the path to financial freedom, the dividend talk podcast aims to explore
- the basics of dividend growth investing
- the benefits of using this investment strategy,
- And a few tips for getting started.
We hope that by sharing our Journey, we can inspire you to start chasing your financial goals.
What is dividend growth investing?
DGI is a strategy for investing in companies that pay out growing dividends and then using the dividend income to reinvest into the same or other companies.
The goal is to build a portfolio of dividend-paying stocks that will generate a steady stream of income over the long term. The strategy is based on the idea that the dividend income can be reinvested to purchase additional stocks. This allows the investor to earn more income over time.
Additionally, dividend growth investing allows investors to take advantage of the power of compounding by reinvesting dividend Income to earn even more money.
The most crucial aspect of DGI is selecting companies that will pay out growing dividends consistently and reliably over time. Investors should look at a company’s track record and ability to continue to pay dividends over time.
(Remember, as Europeans, companies tend to have a different view on payout ratios and sustaining dividends )
Benefits of dividend growth investing.
There are many benefits to dividend growth investing, including the following:
- Diversification – DGI allows investors to diversify their portfolios and reduce their overall risk. Typically, investors can reduce their exposure to stock market volatility by investing in large-cap, mature stocks that pay dividends.
- Income – By reinvesting dividends, investors can generate a steady income stream over the long term.
- Tax advantages – DGI can provide investors with tax advantages. Dividends are generally taxed at a lower rate than other forms of income, so investors can take advantage of this to reduce their tax burden. Please double-check this with your financial advisor, as it is different in every country.
- Long-term returns – By reinvesting dividends, investors can take advantage of the power of compounding, which can lead to significant returns over the long term.
Blogs from the community:
https://tiagodias.substack.com/p/tax-advantaged-accounts?utm_source=profile&utm_medium=reader2
How to get started with dividend growth investing
Getting started with dividend growth investing is relatively straightforward. The first step is to open a brokerage account and fund it with cash. We use IBRK, DEGIRO and Trading 212
Once your account is funded, you can begin researching stocks that pay out dividends and have a history of increasing dividend payments over time. ( We give out companies on our watchlist all the time)
When researching stocks, it is essential to look for stocks with a strong track record of paying out dividends and increasing their dividend payments over time. Additionally, it is crucial to look for stocks that are trading at attractive valuations, as this will help ensure that you are investing in stocks that have the potential to generate decent returns over the long term.
Once you have identified stocks you would like to invest in, you can begin by purchasing them in small quantities. As your stocks generate dividend income, you can reinvest the dividends to buy additional stocks.
Strategies for dividend growth investing.
Strategies might now be the right word, but investors can use a few essential tips when it comes to dividend growth investing to maximize their returns.
- Diversification – Diversifying your portfolio to reduce your overall risk is essential. By investing in a variety of stocks, you can reduce your exposure to stock market volatility and minimize your losses. As you get more experienced and knowledgeable, Diversification may not be as much of a factor.
- Tax-loss harvesting – Tax-loss harvesting means selling stocks that have decreased in value to offset capital gains taxes. By selling decreased-value stocks, you can reduce your tax burden and increase your overall return on investment. Especially if one of your companies cuts its dividend
Does DGI fit in with your goals
It is important to compare DGI to other investment strategies to determine which is best for your goals.
When comparing dividend growth investing to other strategies, one of the key differences is the level of risk involved. DGI is generally considered to be “less risky” than other strategies, such as day trading or momentum investing. This is because it focuses on stocks with a history of paying out consistent and reliable dividends over time, which reduces the investor’s exposure to stock market volatility.
Another key difference is the amount of time involved. DGI requires a longer-term commitment than other strategies. it focuses on stocks with a history of paying out dividends and increasing their dividend payments over time. This means that investors must be willing to commit to the strategy for the long-term in order to reap the benefits.
Finally, it is important to compare the potential returns. DGI has been found to provide investors with higher returns than other strategies over the long-term. This is due to the power of compounding, which allows investors to generate significant returns over the long-term.
https://www.thebalancemoney.com/making-money-with-the-dividend-growth-investing-strategy-357877
Conclusion
Dividend growth investing is a powerful strategy for unlocking your financial freedom. By investing in stocks that increase their dividend payments over time, investors can generate a steady stream of income over the long-term. Additionally, dividend growth investing has been found to outperform the S&P 500 and provide investors with more consistent returns.
Getting started with DGI is relatively straightforward. Investors should open a brokerage account. Fund it with cash, and begin researching stocks that pay out dividends and have a history of increasing their dividend payments over time.
Additionally, investors should focus on strategies such as diversification and tax-loss harvesting to maximize their returns.
If you are looking for a reliable strategy to unlock your financial freedom, dividend growth investing is an excellent option. With a long history of outperforming the S&P 500 and providing investors with more consistent returns, DGI is a powerful strategy for achieving financial freedom.
