The Power of Dividend Growth

In today’s video, I’m going to explain why dividend growth is the most important factor for a long-term dividend stock investor. To make this case, I created a quick model that shows how a $1,000 investment will project out over the span of 30 years. I will compare 3 stocks each with a different dividend yield on cost and dividend growth rate. They will represent 3 archetypes: a low-yield stock with high growth, an average-yield stock with average growth, and a high-yield stock with low growth. Let’s dive into the dividend data.

Timestamps:
Intro: 0:00
Case 1 (Low Yield & High Growth): 0:58
Case 2 (Avg Yield & Avg Growth): 3:19
Case 3 (High Yield & Low Growth): 5:08
The Importance of Dividend Growth: 7:03

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Dividend Growth Investing provides the ability to create cash flow, without selling your position in a stock. This type of investing has a strong compounding effect when dividends are being reinvested back into your holdings. Over time, Dividend Investing can be your pathway to financial freedom!

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Disclaimer: This is my opinion and not to be considered financial advice

#Dividends #DividendStocks #DividendInvesting

[Rhasheed]

Your videos add value to my knowledge everyday.due to the current decline in the stocks, crypto, housing, and financial market at large, what is the best way to keep investments afloat during this bear market?

[cashflow]

I bought V in 2009 at an adjusted price of 15.85. My yield on cost is 11.80%.

[michaeljohnson]

I’m 50, been doing this for about 30 years now. While the theory is certainly accurate it’s very rare to find a company that grows its dividends at 15% for 30 years. Besides “time” the biggest boost to my own dividend stocks has been my income. Investing a 1, 000 a month is a lot different than investing 10k a month. I’ve been wrong on a few of my picks over the years but what really mattered was the quantity of shares.

In short, investment in yourself as a income producer is the ultimate game changer.

On dividends I’ve never bought any stock to buy and hold forever the was less than 2.5%. Growth rates should always be more than 5%.

[AdrijusGuscia]

Are you serious? Projecting dividend growth at 15% for 30 years??? That’s ridiculous and not possible to sustain for any company. I get you want to push dividends as awesome but don’t lose the objectivity and reality. Such projections are not acceptable. Keep these things realistic and don’t oversell the stocks.

[brianwall]

Excellent video with lots of key points. The one thing you didn't touch on is the value of reinvesting the dividends (which, given your apparent diligence, you probably have covered on other videos). This is why I recommend a mix of some decent paying div stocks now coupled with the growth div stocks you mention. Also, having a diverse portfolio is key because in a 30 year window, there are bound to be some companies that come upon hard times and become problematic.

[custardcream]

People get too hung-up on buying into a company that they hope will continually grow their tiny dividend.

I would advise people to create their own spreadsheet and experiment with a specific stock over their estimated timeline. I've looked at my stocks over a 20-year horizon. With all dividends re-invested I've found the clear winners to be stocks that have a higher starting dividend yield, even when drastically cutting their dividends or fully suspending them from time-to-time. If the stock price goes down then great - you can buy even more.

[matusa]

Maann you are 23 like me and already managed to invest 100k? I’m doing my best and I’m at 4k… still going to college tough, I’ll catch you up soon or later😎

[ryanmichaelpower]

I was literally about to say the tables may turn in a way, if you consider dividend reinvestment in the equation. Then you touched on it near the end. That will make an interesting video too.

[get_busy_living]

I like to add some some BDC's and CEF's in my dividend portfolio to bring up the total yield a bit. I did a quick analysis for a high yield no dividend increase scenario using $1000. After 30 years cumulative dividends at 10% =$7350, 9%=$6223, 8%=$5184, 7%=$4231, 6%=$3366.

[Dividendology]

Great analysis Zach. Also important to consider results when you reinvest dividends over time. Dividend growth for the win!

[zaalb]

Time value of money devalues those future payments from Visa relative to money today from Verizon. I’m looking forward to that next video!

[delbomb]

Has ANY company maintained this mystical 15 percent over 30 years? "if" is doing a lot of heavy lifting here and looking at 5 years past to project 30 future seems wild.

[hoosaindalvie]

Im shocked that you are only 23 years old. You have such a good way of explaining divident investing and the power of it. Keep up the good work. No doubt you going to be super successful in the long term as you understand it's a long term game.

[beverlyhills]

Good content. I had to watch it a couple of times to better understand it. The hard bit is to find stocks that achieve a 15 percent dividend growth rate.

[BadVidsGaming]

Mediocre example from Visa though.
If you extrapolate it long enough, you will automatically get bizarre returns. Increasing by 15% year on year for 30 years is a utopia. Correct me if im wrong.

[AlagosGamingLife]

This is something i have been thinking alot about. How high can a company acually keep increasing its dividend in a healthy way. Like any growth stock, they cant keep growing 10% annualy they would outpast the market by milles thats impossible. Isnt the same for dividend growth? divdend might have a limit?

[the_debtfree_investor]

I invested and reinvested in dividend stocks for more than 7 years. Now I make $1550 a month in dividend.

[shadesoffde]

Funny people said the same thing about GE 20 years ago that was wrong then to … buy all the strategies and you’ll be good

[eddiethealbatross]

My goal for the new year is to work and invest at least 20k by the end in dividend stocks while learning to code or some other useful skill that could get me at least a 60k salary easy.
I wish I started investing earlier, i'm not even 10% there.
I'm using these videos to plan the perfect portfolio.

[eduard-adrian]

High dividend only works with reinvestment, that is the catch if you take it only for dividends paid it is obvious that the company that retains and reinvests cash flow in order to grow the dividend at a faster rate will win. Also even with reinvestment if 2 companies that have the same return on capital that are both trading at a 5% fcf yield and one is paying 4% and retaining 1% and the second one retains 4% and pays 1% the second one wins due to dividend and investment taxes. High yield is better if you need money now and can't wait for the dividend to grow or if you want to be paid a large sum regardless of the economic landscape in order to take advantage of market downturns in other higher growth stocks. That being said not every high yield stock is equal look for those that are good quality and can sustain it take for example now BAT, VOW3, VICI.