💸 The Power of Dividend Growth
Every Wednesday it’s Dividend Day.
In this series, I will teach you 5 things about dividend investing in less than 5 minutes.
1️⃣ Dividends Have Great Benefits
Companies that keep raising their dividends are good investments.
Here are some reasons to invest in these companies:
2️⃣ A record payout
Last year, companies paid over $1.66 trillion in dividends!
This year, they are expected to pay even more.
It’s the power of compounding put to work.
3️⃣ A dividend quote
Legendary investor Warren Buffett was taught by value investor Benjamin Graham.
Benjamin Graham recognized the power of growing dividends:
“The prime purpose of a business corporation is to pay dividends regularly and, presumably, to increase the rate as time goes on.” - Benjamin Graham
On Saturday, we’ll tell you more about the advantages of buying companies that regularly increase their dividends.
4️⃣ The power of dividend growth
An S&P Global report shows that companies with growing dividends are:
Strong and careful with their money
Steady in tough markets
Less likely to cut dividends during bad times
Better long-term investments than high-yield stocks that don’t grow
Click the image to get the PDF.
5️⃣ Example of a dividend stock
One company that helped set the 2023 dividend record?
Microsoft.
You probably know Microsoft. If not, they make money from cloud services, software, and hardware.
They also earn from ads on Bing, LinkedIn, and subscriptions like Microsoft 365 and Xbox Game Pass.
Microsoft has been growing its dividend by about 10% a year. Last year, they paid almost $22 billion in dividends!
Profit Margin: 36%
Forward PE: 31.6x
Dividend Yield: 0.72%
Payout Ratio: 25.3%
Source: Finchat
That’s it for today
That’s it for today.
🙏 Compounding Dividends is a new project. We would LOVE to get your feedback on this. Like this post, reply to this email or leave a comment on this post to help us take Compounding Dividends to the next level 🙏
In case you missed it:
Used sources
Interactive Brokers: Portfolio data and executing all transactions
Finchat: Financial data
Instead of paying dividends (which are taxed), Terry Smith and I prefer companies invest those retained earning in project with the highest ROCE
Would love to see the list of dividend growth stocks that would get the ‘buy’ label today, also covering the non-US markets. Thanks for considering.