How to Beat the Market and Earn More Income

Dear DTA, 

We would like to survive retirement, beat the market, and help with college tuition for our grandchildren.

-Barry M. 

Hi, Barry. Thanks for reading. And thanks so much for writing in!

You have some ambitious goals. We love ambitious readers.

And so we do whatever we can to provide great content, information, and resources toward that end.

In that regard, I have some great news for you.

There’s an investment strategy out there that can help you achieve all three goals… simultaneously.

That investment strategy is dividend growth investing.

And we have plenty of resources (many of which I’m going to share with you today) to help you use this strategy to your advantage.

First, let’s just lay out what this strategy is all about.

So dividend growth investing is basically buying up shares in world-class enterprises that are routinely and regularly increasing profit (by selling more products and/or services).

That’s part of it.

The other part is, you’re only buying up stock in companies that share some of that growing profit directly with their stockholders, via growing cash dividend payments.

By sticking to dividend growth investing, you’re essentially eliminating from your available investment universe companies unable or unwilling to share with you your rightful share of growing profit.

If they’re unable, it’s probably because they’re not producing the growing profit. So you can scrap those companies right off the bat.

If they’re unwilling, management is keeping all of the profit for themselves. And you have to trust that they’ll do a better job than you with all of that money. Human nature being what it is, I’d rather have my money in hand. Plus, generating any kind of investment income, in that case, requires the selling off of shares you worked hard to acquire. It’s a no-go.

As you might imagine, dividend growth stocks are thus very often blue-chip stocks.

You can see how that translates by looking over the Dividend Champions, Contenders, and Challengers list.

This list is a compilation of more than 800 US-listed stocks that have all raised their dividends each year for at least the last five consecutive years.

Guess what you’ll find on that list? 

Dozens of blue-chip stocks. Household names. Some of the best companies on the planet.

Go figure!

That’s because in order to produce the growing profit necessary to pay out growing dividends, you have to run a great business that provides the world the products and/or services it demands.

It’s a fantastic investment strategy that some of the world’s best investors have used to build enormous wealth and passive income.

For example, Warren Buffett has bought up many high-quality dividend growth stocks for the $200+ billion common stock portfolio he oversees for Berkshire Hathaway Inc. (BRK.B).

Buffett is known for smashing the market for decades on end, so one would be wise to take a good look at just how he’s gone about doing that.

Indeed, Ned Davis Research has released papers over the years showing the data that concludes that dividend initiators and growers (i.e., dividend growth stocks) vastly outperform an equal-weighted S&P 500 index fund over the long term (using a 40-year period stretching back to the ’70s as a proxy for the long term).

Now, I’m nowhere near Buffett’s level, but I have personally used this investment strategy to go from below broke at 27 years old to financially independent and retired early at 33 years old.

You can read how that journey played out by checking out my Early Retirement Blueprint.

But I’ll spoil just a little bit of the surprise…

I lived below my means and investing my excess capital into high-quality dividend growth stocks, building up my FIRE Fund – a real-life and real-money dividend growth stock portfolio – in the process.

That portfolio generates the five-figure and growing dividend income I need to live my life and pay my bills -without having a day job.

Yes, I don’t have a day job. Yes, I’m in my 30s.

Jason Fieber's Dividend Growth PortfolioI’m instead relying on these companies and the dividends they pay me, which has totally supplanted the need for a traditional paycheck.

So I’m basically telling you that I’m trying to “survive retirement”, too.

It’s just that my retirement is decades longer than most.

I believe it’s such a robust strategy and the passive income is so durable, it’s good enough to hold up for a decades-long retirement.

Of course, this helps you with your third goal.

That’s because any retirement will need to have income coming in. If you’re not at a job, you’ll need passive money to come from somewhere (investments, retirement accounts, Social Security, pensions, etc.).

Well, dividend income is arguably the best passive income of all.

There’s nothing to do to collect a dividend. No phone call to make, nobody to ask, not a finger to lift.

And dividend income could be used for anything you desire – paying bills, traveling, or (yep, you guessed it!) helping out grandchildren with their tuition costs.

Of course, there’s a bit more to it than I’m laying out here. This is just a primer.

But we’ve got a lot more content that can add to the discussion.

Fellow contributor Dave Van Knapp put together a fantastic series of articles that, together, serve to educate novice and experienced investors alike on just what this strategy is, how it works, and how to take advantage of it for your personal financial goals.

Those articles are archived together as a series in his Dividend Growth Investing Lessons.

And then if/when you’re ready to put capital to work, I personally highlight a compelling long-term dividend growth stock investment idea every Sunday.

I go through the analysis and valuation process for readers, pointing out what appears to be undervalued high-quality dividend growth stocks ripe for long-term investment.

That’s part of the Undervalued Dividend Growth Stock of the Week series.

Undervalued Dividend Growth Stock of the Week by Jason FieberI believe this strategy can help you with all three of your goals, Barry.

And I believe the content you can access here will make all of this much easier for you.

But it’s ultimately up to you to further educate yourself and get started.

There’s no time like today to start building a better financial future. 

I wish you luck and success.

Jason Fieber

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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.