Entertainment or EquitiesThe first difficult decision we need to make is to stop buying the "stuff" we want, like wide screen TVs, iPads, smartphones, computers, fancy cars, nice vacations, etc., and instead divert a portion of the money into some form of savings. The inability to exercise this remedial level of self control has put many families on the road to insolvency.
Trading vs. InvestingThe desire for instant gratification does not stop once we chose investing over entertainment. Many new investors start out as traders - 'I want to buy a stock today so I can sell it for a BIG profit tomorrow.' Very few can succeed doing this, for the rest of us it is a recipe for financial ruin.
Dividend Income vs. Dividend GrowthEven those investors that ultimately end up applying an income-based strategy must still face the question of deferred gratification. Do you want to buy a stock with a high yield and high current income or do you want to buy a stock with a modest, steadily growing dividend? If all stocks were created equal, then this would be a fairly simple question, but they are not.
Dividend Growth Stocks For The Long-TermBelow are several dividend growth stocks that provide a good mix of yield and growth that result in an 8-10% Yield on Cost (YOC) in 10-years:
Lowe's Companies, Inc. (LOW) sells retail building materials and supplies, lumber, hardware and appliances through more than 1,800 stores in the U.S. and Canada.
Current Yield: 1.5% | Div. Growth: 19.12% | 10-yr Yield: 8.61%
CVS Health Corporation (CS) is the largest pharmacy health care provider in the U.S.
Current Yield: 1.7% | Div. Growth: 20.00% | 10-yr Yield: 10.38%
Grainger Inc. (GWW) is the largest global distributor of industrial and commercial supplies, such as hand tools, electric motors, light bulbs and janitorial items.
Current Yield: 2.0% | Div. Growth: 15.00% | 10-yr Yield: 8.26%
Phillips 66 (PSX), spun off from ConocoPhillips in 2012, is one of the largest independent refiners and marketers of petroleum products in the U.S.
Current Yield: 2.5% | Div. Growth: 15.00% | 10-yr Yield: 10.29%
Target Corp. (TGT) operates nearly 1,800 Target, SuperTarget and CityTarget general merchandise stores across the U.S.
Current Yield: 2.7% | Div. Growth: 15.00% | 10-yr Yield: 10.65%
Microsoft (MSFT), the world's largest software company, develops PC software, including the Windows operating system and the Office application suite.
Current Yield: 2.7% | Div. Growth: 15.00% | 10-yr Yield: 10.75%
Raven Industries Inc. (RAVN) is an industrial manufacturer that provides electronic precision-agriculture products, reinforced plastic sheeting, electronics manufacturing services, specialty aeronautics, and sewn products.
Current Yield: 3.3% | Div. Growth: 8.33% | 10-yr Yield: 8.02%
Omega Healthcare Investors Inc. (OHI) is a real estate investment trust (REIT) that invests in income-producing healthcare facilities, mainly long-term care facilities located in the United States.
Current Yield: 6.7% | Div. Growth: 2.70% | 10-yr Yield: 8.71%
In the past, I had updated you on a retirement-age couple that would never retire because they chose to devote their life to instant gratification - always spending a little more than they made. Since the last update, things have continued to go down for Bill and Jackie (not their real names). Due to the economy and health problems, they are unable to generate a steady income. They moved out of their house, stopped making the payments on it and the bank foreclosed on the house. They lost what little equity they had in the house and now live in one of their children's rental homes. Their family continues to provide for them, in spite of their own financial issues.
We define our future by the choices we make.
Full Disclosure: Long MSFT, RAVN, OHI. See a list of all my Dividend Growth Portfolio holdings here.
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- 7 Undervalued, Big-Name Stocks To Consider For Your Dividend Portfolio
(Photo: Steve Woods)
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