Dear DTA,
I’m interested in retiring early. I would appreciate recommendations of long-term healthcare stocks and some “blue chip” stocks like GE. Thank you!
-Reggie B.
Hi, Reggie.
Thanks for writing in. We appreciate your question and your readership!
It’s great that you have an interest in retiring early, and taking control of your finances is certainly the first step toward that goal.
I’m personally taking the time to write back to you today because I believe I’m in a fantastic position to help you.
I say that because I was also very interested in retiring early.
So interested, in fact, that I dedicated years of my life toward the endeavor.
Finding myself broke, unemployed, and unhappy in my late 20s, I decided “enough was enough”.
And I turned it all around by living below my means and intelligently investing my excess capital into high-quality, blue-chip stocks that pay growing dividends.
I ended up becoming financially independent and retired early at just 33 years old by following those simple ideas.
Since you have an interest in early retirement and blue-chip stocks, I’d say I’m your guy.
First, definitely take the time to read through my Early Retirement Blueprint.
It’s a totally free resource that discusses some of the mechanics behind early retirement, especially from the angle of living off of passive and growing dividend income from blue-chip stocks.
While the Blueprint is admittedly just my perspective on things (shaped by my own journey to early retirement), there are important concepts in there that can be broadly applied to just about anyone’s situation (including yours).
So let’s quickly discuss some of those mechanics.
One major aspect is obviously saving money. You need to live below your means.
They say you need money to make money. Well, that’s correct: you can’t invest money if you don’t have any.
This means the first step toward creating wealth and passive income, which is vital for being able to retire early, is developing good personal finance habits that allow you to run a budget surplus (spending less than you earn).
Once you have some capital to work with, it’s time to invest.
Before you invest, though, you’ll want to educate yourself.
If you want to be an intelligent investor, which is basically to say a successful investor, you need to build up your knowledge and intelligence as it pertains to investing.
Now, there are a lot of ways to go about investing. And you’ll want to research the various strategies out there to discover which one works best for you.
However, I can say from a bona fide early retiree to an aspiring early retiree, dividend growth investing is a fantastic strategy for early retirement.
This strategy plays to your interest in blue-chip stocks, since many high-quality dividend growth stocks are also blue-chip stocks.
Dividend growth investing is incredibly simple and straightforward.
You basically allocate your capital toward high-quality stocks that have lengthy track records of paying out growing cash dividend payments.
Said another way, you’re limiting your investments to businesses that are so prodigious at producing growing profit, they’re able and willing to share that growing profit directly with their shareholders (who are the collective owners of any publicly traded company).
If a company isn’t able to pay me a growing dividend, that means it’s probably not producing a growing profit.
No, thanks.
And if a company isn’t willing to pay me a growing dividend, that means it’s keeping my fair share of that growing profit to itself.
No, thanks.
For more on just what this strategy is all about, why it’s so great, and how you might go about successfully using it to build your wealth and passive income toward early retirement, make sure to check out fellow contributor Dave Van Knapp’s Dividend Growth Investing Lessons.
The stock you named above is not a dividend growth stock, and I don’t believe anyone sees it as a blue-chip stock, either. Not any longer, anyway.
But there are many high-quality dividend growth stocks that make for excellent long-term investments. And many are also blue-chip stocks.
Take a look at the Dividend Champions, Contenders, and Challengers list for proof of that.
That list has compiled invaluable data on almost 900 US-listed stocks that have raised their dividends each year for at least the last five consecutive years.
You’ll see blue-chip names in healthcare (a mentioned industry of interest of yours) like Johnson & Johnson (JNJ), Amgen, Inc. (AMGN), and Medtronic PLC (MDT) on that list.
For good reason, too, since these are fantastic businesses that produce gobs of profit.
You might be wondering by now how all of this works for early retirement.
What does an early retirement stock portfolio look like?
Well, I can show you what mine looks like.
My portfolio is the FIRE Fund.
The FIRE Fund is my real-life and real-money dividend growth stock portfolio.
I’ve aptly named it that because it generates enough five-figure and growing passive dividend income to become financially independent and retire early.
Indeed, I can pay my basic bills in life without a job or the associated paycheck.
I’m now paid just to wake up and exist.
It’s pretty amazing, Reggie.
Now, that’s just my portfolio.
Yours will surely look different. Depends on your circle of competence, risk tolerance, and business interests, among other things.
Either way, I think this gives you some basic ideas as to how to go about thinking about investing toward your own early retirement dreams.
Once you are ready to actually put capital to work (after you’ve already educated yourself and you’re fully aware of what you’re doing), I personally take the time every Sunday to highlight a compelling long-term dividend growth stock idea.
These are free ideas for the investment community at large.
And I only present them after a stock passes a rigorous analysis, which includes looking at fundamentals, weighing competitive advantages, assessing risk, and performing a valuation.
When a high-quality dividend growth stock looks undervalued, I present it as part of the Undervalued Dividend Growth Stock of the Week series.
These resources can definitely help you intelligently invest in blue-chip dividend growth stocks and retire early, Reggie.
But it’s up to you to take action.
There’s no time like today to start.
I wish you luck and success.
Jason Fieber
Disclaimer: Jason Fieber is not a licensed financial advisor, tax professional, or stock broker. Please consult with a licensed investment professional before investing any of your money. If your money is not FDIC insured, it may decline in value. To protect the privacy of our readers, any names published in this article are under aliases. In addition, text may be edited, omitted or paraphrased for grammar or length.