Reader Mailbag: “We’re looking to build our retirement and supplement our income both now and in the future.”

Dear DTA,

We are looking for ways to build our retirement and supplement our income both now and in the future.

-Gabby G.

Hi, Gabby. It’s wonderful for us to hear from readers like yourself.

We’re interested in not only providing high-quality, actionable, and inspirational content to our readers, but we’re also interested in directly and positively impact their financial futures.

It’s in that spirit that we’re reaching out to you today to see if we can somehow help you improve your retirement plans and supplement your income.

First, I’ll just note that you couldn’t possibly find someone who’s also more interested in supplementing income both now and in the future.

Some people think being broke is rock bottom in terms of finances.

Well, I disagree. Being below broke is worse.

How can you be below broke?

Well, this is when you have a negative net worth – when your liabilities outstrip your assets. And this is exactly where I was as recently as 2010.

But I became determined to turn it all around.

And I didn’t want to just build a retirement; I wanted to build a retirement that could be achieved decades before most people.

I knew that in order to do this, I had to slowly but surely supplement my work income with passive income, aiming for a level of passive income that could totally cover my expenses one day, rendering me financially independent in the process.

This plan worked out tremendously: I became financially free at 33 years old.

The real-life and real-money portfolio I built by living below my means and investing my excess capital into high-quality dividend growth stocks is now worth well into the six figures – and this portfolio generates five-figure passive dividend income that is organically growing all by itself.

While becoming financially independent in my early 30s is a wonderful feeling and, the passive income that allowed for this life-changing position in the current moment also benefited me and was available to me all the way along the journey from below broke to financially independent.

See, building passive income is an ongoing process that can benefit you both now and later.

This is especially the case when talking about dividend growth investing.

This investment strategy essentially means one is buying up shares in high-quality businesses that have a penchant for regularly and reliably rewarding their shareholders with rising dividend payments. These rising dividend payments are funded from the rising profit these high-quality businesses are earning, because they’re often selling more products and/or services to more people around the world, all at prices that are slowly increasing over time.

As you might imagine, many high-quality dividend growth stocks are well-known blue-chip stocks.

Microsoft Corp. (MSFT), Johnson & Johnson (JNJ) and Coca-Cola Co. (KO) are all dividend growth stocks.

And these are also some of the most recognized and successful businesses the world has ever known.

You can find more than 800 US-listed dividend growth stocks by perusing David Fish’s Dividend Champions, Contenders, and Challengers list, which includes an incredible amount of invaluable data on stocks that have paid increasing dividends for at least the last five consecutive years.

Dividend growth investing is one of the best examples of when you can “have your cake and eat it, too”.

That’s because every single dividend growth stock investment you make in real-time will most likely deliver you a dividend within a few months, perhaps even just weeks.

That’s the kind of positive feedback that’s almost immediate.

And this is real money we’re talking about here. Dividends are cash money that spend just like any other form of income. In fact, it’s arguably much better than any other form of income, as it’s income that you don’t have to continue to work for. It’s almost totally passive.

Plus, you’re looking at the potential for ongoing and growing passive income for… well, maybe the rest of your life.

That latter point is reinforced when looking at some of the dividend growth streaks some of these stocks are rocking.

For example, I mentioned Johnson & Johnson a few moments ago.

This is my largest personal holding – for good reason.

It has been paying an increasing dividend for 55 consecutive years. It’s highly likely that the company will continue to pump out increasing dividends for many more years to come. I mean, we’re talking generations here. We’re talking a lifetime for many people – and the company’s dividend growth is still going strong.

And due to the quality of the business and its long-term track record for delivering higher profit and dividends to shareholders, this is exactly the kind of business that one could look at when considering building their retirement.

When building your retirement, you want investments you can count on… rain or shine.

As someone who no longer has a regular “paycheck” that a day job will provide, I like knowing that my numerous dividend “paychecks” are now coming from high-quality businesses that can generally be counted on to deliver me current and long-term passive income.

Now, I’ve just highlighted some of the basics here.

Don’t worry, though. We’ve got you covered for a more in-depth dive into dividend growth investing and how it could potentially allow you to better your financial situation in life in a big way.

For example, fellow contributor Dave Van Knapp wrote an excellent series of articles he calls “lessons” on dividend growth investing, which serve to educate novice and experienced investors alike on the merits of the strategy and how it can be successfully implemented in real life.

And if/when you’re ready to put some of your hard-earned capital to work, I personally author a series of articles here on the site that allows me to uncover a high-quality dividend growth stock that appears to be undervalued at the time of writing.

The Undervalued Dividend Growth Stock of the Week series is a great place to dive into some compelling opportunities, as I do my absolute best to make sure I’m providing really appealing long-term investment ideas to the dividend growth investing community.

You can build your retirement, Gabby. And you can put yourself in a position to benefit from passive income both now and later.

But this won’t happen by itself. It will require some work and planning on your part.

However, some of the resources I’ve provided today could help in a big way.

And the best time to start is now.

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.