Note from Daily Trade Alert: Today we’re continuing with the third installment in our series of articles from a young man who calls himself “Dividend Mantra.” This series — commissioned by DTA — aims to show our readers exactly how this 30-year old (with a $50k salary) plans to retire in just 10 short years from now. As a reminder, unlike the majority of analysts we cover here at Daily Trade Alert, “Dividend Mantra” is NOT a professional (and he doesn’t claim to be). Nevertheless, we’re fascinated by his story and we’re confident our readers will benefit from his approach to generating a lifetime of steadily rising income…
In my last article, I showed you the 28 stocks I personally have over $75,000 invested in.
Remember, I’m 30 years old and I’m banking on these stocks to help me retire by the time I’m 40.
I realize 10 years isn’t a lot of time, so the stocks I own have to be special.
Not only do I need them to provide me with a rising stream of passive income, but equally important, they need to be safe.
After all, I’m betting a very large portion of my net worth on these companies.
At the end of the day, there’s really only one set of stocks I know of that can help me achieve my aggressive retirement goal with relatively very little risk.
They’re called “dividend growth stocks”… and not only are they paying me rising streams of passive income year in and year out, but by their very nature they’re also what I consider to be the safest stocks on the planet.
The idea is pretty simple: I want to own companies that dominate their industries and sell their products no matter what’s going on with the overall economy.
I really don’t care if these companies are “boring”… the important thing is that they make money and that they reward their shareholders with steadily-rising dividends.
These are companies like Wal-Mart (WMT), Coca-Cola (KO), Pepsi-Co (PEP) and Procter & Gamble (PG).
Not only do these companies have strong histories of paying dividends like clockwork, but they’ve been growing their payouts by margins that have well exceeded inflation year-after-year!
For example, over the past 10 years Coca-Cola has grown its dividend by an average of 10.1% each and every year.
As you can see in the chart below, it’s a similar story for Pepsi, P&G, and Wal-Mart.
So what makes these companies so safe?
Follow me here…
First, they either manufacture or sell goods that people want or need on an almost daily basis.
And because of that, they’re able to operate on a global scale. They can also raise prices over time which increases their revenue streams.
Those increased revenue streams eventually carry to the bottom line and then allow the companies to pay investors increased dividends.
These increasing dividends provide a demand for the shares in the open market, which provides a certain level of safety that, say, your “next hot stock” probably won’t have.
These companies are enduring… they have economic moats around their businesses… they operate on a global scale… and they have products that have been in demand for decades.
At the end of the day, I’m confident that tomorrow and next year and even 10 years from now people will still be buying the products these companies sell.
And I can sleep well at night knowing that I’m collecting a steadily-growing supply of income from them all along the way.
That’s why I think dividend growth stocks are the safest stocks on the planet — and why I’d encourage anyone interested in generating their own safe, passive and ever-growing income stream to take a closer look at these remarkable investments.
Thanks for reading.
– Dividend Mantra