Dear DTA,
I’ve been sitting on cash, waiting for a good time to buy stocks. But they keep going up. It looks like I’ve been missing out. How do I find good opportunities here?
-Brent B.
Hi, Brent.
Thanks for writing in. Always a pleasure to hear from our readers.
That’s a great question there.
I totally understand your apprehension.
The broader stock market is not cheap right now. In fact, by many measures, the S&P 500’s valuation is downright expensive.
However, that’s only looking at the entire market.
You have to remember that it’s a market of stocks, not necessarily a stock market.
Unless you’re going out and buying the entire market, you have to look at valuations on a stock-by-stock basis.
By doing so, you’re analyzing and valuing every business at an individual level.
Every business has unique dynamics.
Different fundamentals, competitive advantages, risks.
Likewise, every business is valued differently.
A consumer products company will almost certainly have totally different dynamics than a semiconductor company.
And so you can’t apply an extremely broad template to disparate businesses.
If you’re ready to approach every business individually and intelligently, looking at investing through a long-term lens, I have a number of resources for you that can help you build serious wealth and passive income.
These resources are coming from a guy who became financially independent at a very young age after investing his way out of poverty.
You can read more about how I did that in my Early Retirement Blueprint.
A major aspect of that journey is, of course, the investment strategy I used (and still use).
That strategy is dividend growth investing.
Fellow contributor Dave Van Knapp put together an excellent program designed to teach investors the A-Z of DGI.
Read his Dividend Growth Investing Lessons for more.
They lay out what this strategy is, why it’s so effective, and how to successfully execute it.
This strategy basically advocates buying stocks that pay reliable and rising cash dividend payments.
These stocks represent equity in world-class enterprises that are selling the products and/or services that allow the world to properly function.
Hundreds of examples can be found on the Dividend Champions, Contenders, and Challengers list.
These enterprises make a lot of money. In fact, they tend to make more money year in and year out. And as a shareholder in one of these enterprises, you deserve your fair share of that growing profit.
That’s where a growing cash dividend payment comes in.
It’s the proof in the profit pudding.
A growing cash dividend can serve as an excellent litmus test of business quality.
After all, you can’t write a check you can’t cover. You certainly cannot write ever-larger checks, year after year, that you can’t cover.
You buy a high-quality dividend growth stock at an attractive valuation, after a thorough analysis.
Then hold it for the long haul.
Reinvest growing cash dividends.
Watch your wealth and passive dividend income stack up.
This is precisely what I did on my way to building out the FIRE Fund.
That’s my real-money early retirement dividend growth stock portfolio.
It generates the five-figure passive dividend income I live off of.
I’m able to live out my early retirement dreams because of the growing dividend income it generates on my behalf.
Are all dividend growth stocks good investments at all times?
Of course not!
Again, that’s where the individual dynamics, analysis, and valuation come into play.
Fear not, though.
We have plenty of opportunities for you to sort through.
I actually highlight a compelling dividend growth stock investment idea every Sunday.
These ideas are presented after a comprehensive analysis and valuation.
I share only high-quality dividend growth stocks that appear to be undervalued.
You can access these opportunities via the Undervalued Dividend Growth Stock of the Week series.
I understand your apprehension, Brent.
The S&P 500 seems frothy.
However, at the same time, there are individual stocks out there that look very appealing right now.
Of course, it’s ultimately up to you to take action.
Even undervalued high-quality dividend growth stocks can’t be great investments if you never buy them.
So make sure to start today.
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.