| Instead, management teams often maintain their intense focus on success within their market niche and use free cash flow to reward their shareholders. This allows them to maintain their valuation multiples once growth begins to slow. This is all a part of the maturation process of a high-quality company. It takes 25 years of consecutive annual dividend increases for a stock to become a dividend aristocrat. These aren't exciting start-up companies. However, that doesn't mean that their returns can't be above average. Some of the most popular names in the stock market today, like Apple (NSDQ: AAPL) and Starbucks (NSDQ: SBUX) have recently decided to pursue the DGI path. Now, they're up-and-coming superstars in the dividend growth space. For a company to have a dividend increase streak that spans multiple decades, it must not only have a generous management team, but also a strong history of operational success. Dividends can't grow sustainably without rising earnings to match. Rising earnings are derived from sales growth, which comes from broad and persistent demand in the market inspired by constant innovation. Sure, some of the classic dividend growth companies, like Coca-Cola (NYSE: KO), Proctor and Gamble (NYSE: PG), or Altria (NYSE: MO) seem like stodgy stock selections compared to hip technology names. However, when you look at a long-term performance chart of these companies, it doesn't take long to realize that there's a reason that so many investors swear by them. Their success might not make headlines, but that doesn't make it any less significant. Beating Inflation I don't take back what I said about time being an investor's most precious asset. However, I do admit that there are two sides to that coin. In a healthy economy, we expect to see low single-digit inflation occur annually. This might not seem like much, but it does have a cumulative negative effect on your buying power. For those who rely on passive income in retirement, the purchasing power their income stream is about all that really matters (financially speaking). This is the problem with cash stashed under a mattress or even stagnant yields on bonds or equities. Over time, inflation will win out. However, this isn't the case for an income stream that is growing annually. It gives me great peace of mind knowing that just about every month my portfolio generates more passive income than it did during the same period a year prior. Not only do I receive regular payments from the many dividend growth companies that I own, but they give me regular raises as well. Over the past five years, my passive income has posted double-digit growth annually. I don't know about you, but I certainly don't receive such generous raises at work. The only thing better than reliable income is reliably increasing income. This is what a dividend growth strategy offers, which is why it's my chosen path towards financial freedom. If you're looking for other "income growth" opportunities, my colleague Jim Pearce just unveiled an ambitious investment initiative called the Income Millionaire Project. Jim is chief investment strategist of our premium trading advisory, The Income Millionaire, so he knows a thing or two about finding reliable sources of growing income. The goal of Jim's program is simple: Show 1,000 Investing Daily readers how to quickly make $1,000,000 in retirement income… without shouldering excessive risk. Want to know more? Click here for the details. | 
Tidak ada komentar:
Posting Komentar