Dividend Growth Investing

Dividend Growth Investing Blog

Allow Me To Introduce Myself

with 2 comments

The first thing you should know about me is that I’m 33 years old, married, and have two small children.  I have roughly $1,000,000 in total assets.  It’s almost entirely in stocks (individual funds and mutual funds), with about $150,000 in cash from selling my house, and about $40,000 in house equity.  I don’t include house equity in any calculations however, since that money is not working for me.

The next thing you should know is that my goal is to retire in 2 years, at age 35.  There are several reasons I desire this, which I’ll explain in the future.

I currently hold $90,000 in dividend growth stocks, with approximately $10,000 in each of nine stocks.  My plan over the next 4-5 months is to re-balance my portfolio to hold approximately $250,000 of my overall portfolio into dividend growth funds.  Assuming no market booms or busts, that will be approximately 25% of my overall net worth.  At $250,000 I would like to own between 15 and 20 different companies but I don’t plan to force it.

With my current dividend growth portfolio, I have an estimated 7.6% return on investment that equals $6844.  My target retirement payout is $36,000 per year, which is what my family can comfortably get by on.  Assuming I keep ~7% target payout as I grow my portfolio, this would require a total capital investment of $514,000.  Luckily I have 2 years left on my contract before retirement, which should be sufficient time to rebalance.

The reason I prefer dividend growth stocks is two-fold:

1. Extremely early retirement such as what I am planning for is not for the feint of heart.  It may be stressful at times, and watching your capital rise and fall would not be a fun ride when it’s your family’s future you’re watching.  But dividend growth stocks do not rise and fall in payouts, they consistently just rise.  Most have risen for at least 10 consecutive years, and in many cases it’s more than 25 years.  Some more than 50 years!  In this case, the rise and fall can be fun:  A rise means your capital goes up, while a fall means you can buy more yield for your money.

2.  Note that I consistently refer to dividend growth stocks.  Most of these have grown at 8-10% year over year for 10 years and more.  What this means is that while my initial retirement may be “just getting by,” the next year would not only increase for inflation but leave a little extra on top.  That will compound until I reach financial runaway.

Over the next series of posts, I’ll continue to explain my dividend growth strategy and dive into my actual portfolio holdings.

What about you, why do you hold dividend growth stocks?  Or if you don’t, why not?

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Written by dividendgrowthguy

July 11, 2011 at 1:28 pm

Posted in Uncategorized

2 Responses

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  1. Welcome to the world of blogging.

    You’ve done quite well for yourself- over a million in assets by 33. Nicely done.

    To answer the post question, the reasons I hold dividend stocks are- they use capital well, they provide passive income, they are shareholder friendly, they provide good returns, and they require little portfolio maintenance, among other things.

    Dividend Monk

    July 12, 2011 at 3:48 pm

    • All excellent reasons. I think the biggest one that gets overlooked sometimes is how they handle capital so well. So many growth stocks and many value stocks as well don’t manage their capital nearly as well. They feel the need to spend it through R&D and acquisitions when the truth is that it would be better to hand the rest back to their stockholders.

      dividendgrowthguy

      July 13, 2011 at 11:21 am


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