Tuesday, April 30, 2019

5 Dividend Stocks For The Ultimate In Deferred Gratification

Deferred gratification is a principle where one or more people choose to postpone near-term benefits in order to enhance their chances of greater benefits in the future. In our microwave society marked by the 'I want it now' attitude, it is unusual to find someone willing to wait. However, deferred gratification is essential for anyone wanting to build wealth and is a key ingredient in a successful dividend investing strategy. Consider these choices:

Entertainment or Equities

The 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. Investing

The 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 Growth

Even 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-Term

Below are several select dividend growth stocks that provide a good mix of yield and growth that could result in an 8-10% Yield on Cost (YOC) in 10-years:

Air Products and Chemicals Inc. (APD) is a major producer of industrial gases and electronics and specialty chemicals also has interests in environmental and energy-related businesses.
Current Yield: 2.4% | Div. Growth: 10.9% | 10-yr Yield: 8.4%

Illinois Tool Works Inc. (ITW) is a diversified manufacturer that operates a portfolio of 60 business units that serve industrial and consumer markets globally.
Current Yield: 2.8% | Div. Growth: 12.4% | 10-yr Yield: 8.1%

Dominion Resources, Inc. (D) is one of the largest producers and transporters of energy in the U.S., Dominion also operates the largest natural gas storage system and serves retail energy customers in 15 states.
Current Yield: 4.5% | Div. Growth: 7.6% | 10-yr Yield: 10.2%

National Health Investors (NHI) is a real estate investment trust that invests in income-producing health care properties primarily in the long-term care industry.
Current Yield: 5.4% | Div. Growth: 5.3% | 10-yr Yield: 8.9%

Tanger Factory Outlet Centers (SKT) is a self-administered and self-managed real estate investment trust that develops, acquires, owns, operates and manages factory outlet shopping centers in the United States.
Current Yield: 6.8% | Div. Growth: 2.0% | 10-yr Yield: 10.0%

We define our future by the choices we make.

Full Disclosure: Long ITW, NHI,

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- 5 Best U.S. Dividend Growth Stocks
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- 5 Stocks With A Low Debt To Total Capital


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