What makes rising income that comes from a growing dividend so attractive in a yield stock? You not only receive greater income as the years go by, you also get a rising stock price—because the instrument Producing the income (the stock) is worth more as the income it produces increases. In effect, you get a “double dip” when you invest in high-yield stocks that have rising dividends. You get the income that increases to meet or surpass inflation, and you get the effect of that rising income on the stock price, which is to force the stock price higher. – Lowell Miller (The Single Best Investment)
Listen up guys! This quote has been a revelation to me. Truly! Dividend growth is the key. It’s the key to early retirement. It’s the key to my freedom. It’s the key at the basis of the whole dividend growth investing strategy.
Once I read, understood and experimented Lowell Miller’s concept presented here, my life changed for the better. I had finally found a sound investment strategy that would be at my arm’s lenght (no need for huge amount of capital to start), easy to follow and implement and that would harness the incredible power of compounding interests.
Since november 2013, with hard work and many changes in my (bad) habits, I’ve been able to save and invest 40,000$ and generate a stream of 1500$ per year in growing passive income! Not bad! Plus, I’ll add 8000$ in capital to invest on top of this pretty soon and I hope to be able to get an extra 350$ in passive income out of this capital.
That will make almost 2000$ of growing passive income accumulated in a year and a half! And this is just the begining of a great adventure.
Thanks to Lowell Miller, to Jason Fieber from Dividend Mantra and to all of you guys out there seeking early retirement through dividend growth investing, my life has changed for the better.
Dividend growth is the key because with rising income, the asset is obviously worth more on the market. So you get the income, inflation protection on your income because companies are usually able to pass inflation to their customers and raise the dividend faster than inflation so you can also get the compounding interest effect on the income itself and you also get some protection on your capital over the long-term because the rising income makes your asset worth more.
Dividend growth is really the fuel of the dividend growth compounding machine that we’re all trying to build for ourselve here. If you didn’t understand this concept as of yet, I suggest you read Lowell Miller’s book who can explain it better than me.