Inflation has shot up to the highest level since 1982 in Belgium and stood at a whopping 8.31% in March. On every 100 Euro we owned last year, we’ve lost over 8 Euros worth of purchasing power. Of course, Belgium is not alone, with many other countries’ citizens experiencing a much higher cost of living compared to just a few months ago. Should we be worried? And what can we do to protect our wealth and financial independence?
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A couple of weeks ago a bunch of us felt a disturbance in the Force – sadly it was not the new Star Wars movie. Indeed, something terrible had happened. Dividend growth investor darling Kinder Morgan fell from its pedestal after its stock price declined for months. On top of that the company had to announce a dividend cut, basically right after I purchased my first shares.
Compared to other investment strategies out there, dividend growth investing is unlike any other. By the very definition of the word it’s not just investing, neither is it investing for dividends. It’s dividend growth investing, with the growth part being key – and the reason why the strategy draws me so much.
Dividend growth investors are interested in just one thing: stable dividend payments, preferably with a high initial yield and double digit growth rate. However, not all dividend stocks offer a juicy yield on cost or strong yearly increases. Dividends differ between sectors to the point that even the Euro Dividend All-Stars look like a patchwork of industries and yields. But why exactly do some sectors offer a higher yield than others?
At the top of the list of dividend growth investing benefits many a seasoned investor will rank the principle of income diversification through a basket of stocks that throws off dividends. Rightly so, it’s better to receive ten small paychecks worth €1,000 in total rather than one big cheque worth exactly the same amount. Even though it’s easy to diversify your income sources with dividend stocks, only few investors actively pay attention to it.
