Dear DTA,
We are just trying to survive retirement. We have what we need, and our house is paid for, but travel is just not an option for us now. My husband and I both worked for non-profits. We enjoyed our work and liked the feeling of helping others, but we were young and foolish enough not to think much about retirement or make realistic plans and decisions for the future. I would like to learn enough about stocks to be able to provide a little extra in the future. Thank you for helping in that endeavor!
-Jennifer J.
Hi, Jennifer.
Thanks so much for writing in, offering the feedback, and advising us as to where we can best serve you.
First, congrats on putting yourself in a pretty solid position.
Having a paid-off house and not being in need of anything in retirement is actually not something that all of your fellow retirees can claim.
Of course, I can also understand how you’d love to have a little extra, especially in terms of being financially flexible enough to travel and do a few other things you’d enjoy.
It’s my aim today to share a few pieces of information that may just be able to help you and your husband accomplish what you’re setting out for.
I want to let you know that this is coming from a fellow retiree.
My situation in life is such that I live off of passive income. I don’t have a day job.
The main difference between me and other retirees, however, is that I’m in my 30s.
I’m telling you this not to brag or anything, but I’m rather sharing it because I think it’s instrumental to display the value of what I’m going to discuss throughout this article.
If the process I’m going to share is so robust that it can support a retirement of many decades and allow someone to quit their job in their early 30s, it’s that much more powerful for someone who has retired in a more traditional manner.
Now, I wasn’t always in this position.
I was once unemployed, below broke, and miserable.
But I was determined to own my time, master money, and take control of my life.
That journey from below broke to early retirement unfolded as I’ve shared in my Early Retirement Blueprint, which is a step-by-step guide that just about anyone can adopt and use in a way that makes sense for their own financial goals.
A major pillar of my success is the long-term investment strategy I’ve used, which I’m going to explore and break down for you today.
That strategy is dividend growth investing.
This is a phenomenal strategy to accomplish exactly what you’re looking for: a little extra something, more flexibility, and maybe even the ability to travel.
Best of all, this strategy is extremely intuitive and straightforward.
It simply involves buying equity in wonderful businesses that have a lengthy track record of reliably paying rising cash dividend payments to their shareholders.
Such a track record is a great initial “litmus test” of business quality.
After all, you can’t write out ever-larger checks to people without simultaneously producing the ever-larger amount of money to make sure those checks can get cashed.
Likewise, you have to run a great business that generates the rising profit necessary to sustain growing dividend payments to shareholders.
You can’t practically run a terrible business that isn’t profitable while simultaneously sending out growing dividends for years on end. It just doesn’t work like that in reality.
Jennifer, you need not look high and low for these stocks.
Many of these businesses and their products/services are staring at you right in the face, every day of your life.
It might be the utility company that provides your home with power.
It might be the healthcare company that provides the medicine you or someone you know needs.
It might be the technology company that manufactures the smartphone in your pocket.
You can actually find more than 800 examples by perusing the late, great David Fish’s Dividend Champions, Contenders, and Challengers list – a compilation of data on US-listed stocks that have raised dividends each year for at least the last five consecutive years.
Where this strategy really benefits you is in the dividends themselves.
See, growing dividend income can be a fantastic source of totally passive investment income, which can provide you with that something extra you’re looking for. And that “something extra” will likely grow each year!
I can show you what that looks like for me.
My FIRE Fund, which is my real-life and real-money dividend growth stock portfolio that I share with the world, generates the five-figure and growing passive dividend income I need to cover my basic expenses in life.
Not only does that passive dividend income cover me today, but it’ll cover me even more next year and every year thereafter.
That’s because the dividends are growing year in and year out, as the underlying businesses make more money by selling more products and/or services, to more people, at higher prices.
Of course, you can’t blindly approach this investment strategy, which is something that can be said for any investment strategy.
Fortunately, we’ve got all the resources you need to further educate yourself.
Fellow contributor Dave Van Knapp put together a great series of articles that, collectively, cover just about everything you’d need to know about how to successfully implement dividend growth investing toward your own financial goals.
He calls these articles his Dividend Growth Investing Lessons.
And then if/when you’re ready to invest, I personally take the time every Sunday to highlight a compelling dividend growth stock for long-term investment.
These ideas are based on fundamentals, qualitative aspects, risk assessment, and valuation.
I share my findings via the Undervalued Dividend Growth Stock of the Week series.
You and your husband can put yourselves in an even better position, one that allows you the extras, flexibility, and even travel.
And I believe the resources we provide here, for free, can help you toward that end.
But it’s ultimately up to you, Jennifer, to take that next step.
There’s no time like today to start moving toward a better financial future.
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.