DGRO - If I Could Only Own 4 Dividend Funds It Would Be These
2024-03-28 08:30:00 ET
Summary
- Dividend investing is a powerful method for compounding wealth over the long-term that comes with several advantages.
- I share my four favorite dividend ETFs right now.
- I discuss what I like most about each and also how I would weight these four funds if combined in a portfolio.
Dividend growth investing can be a very profitable way to compound wealth over the long term. It brings with it numerous advantages, including:
- Focusing investors on what matters most: the fundamentals of the business. Even if the stock market gets volatile, if the company can continue to pay and even grow its dividends, then the compounding of intrinsic value continues unabated. As long as the company continues to grow its dividend, eventually, the market price will reflect that.
- It provides investors with a combination of current passive income and long-term capital appreciation. Over time, this can lead to a "best of both worlds" situation where the portfolio's passive income exceeds your living expenses and also grows faster than inflation while also still generating attractive appreciation, leading to the ability to retire off of dividends while also growing a meaningful estate to pass on to your heirs.
- Dividend growth stocks generally are great companies that are well-managed because companies can only pay out and consistently grow dividends if they are strong, profitable, and growing businesses and a company that makes that sort of consistent financial commitment to shareholders also has to be more disciplined with its capital allocation decisions since it is sending a considerable amount of its capital out the door to shareholders at regular intervals.