Published Thu, 10 Jan 2019 00:58:20 -0500 on Seeking Alpha
Dividend growth stocks are the most time-tested and proven way of building wealth over time.
Not just do they tend to beat the stock market (itself the best-performing asset class in history) over time, but they do so with lower volatility. That's because income investors, including retirees looking to live off dividends, are more long-term focused, and as long as a company's payout is safe and growing, are less prone to panic-selling during inevitable downturns.
Trailing Total Returns Vs S&P 500 By Strategy
(Source: Ploutos Research)
That historical outperformance is not a trick of cherry-picking time frames either. As you can see, dividend growth stocks have continued to outperform the S&P 500 over all time frames. That includes the most severe correction in the last 10 years.
But while market-beating total returns are great for investors like myself (32 years old) who have long time horizons, high-yield stocks are what many older investors (near retirement or already retired) are looking for. Fortunately, the world of REITs offers a way to combine high-yield to pay the bills during your golden years with inflation-beating long-term income growth. This allows you to not just preserve your buying power over time but also grow it, as well as your overall nest egg's size.
My goal is always to point out great long-term income growth opportunities to my readers. Iron Mountain (IRM) is one of my favorite... Read more