Dear DTA,
Hi. Just found your site. I’m a beginner. I started reading finance and investing stuff about a month ago. Is there a way to know which strategy is best?
-Jess P.
Hi, Jess.
Thanks for writing in.
Glad you found the site. Hope you’re enjoying and finding value in the content. We publish quality, actionable articles that can help you make informed choices with your money.
You have a great question.
Which strategy is best?
There’s no one “best” strategy for everyone.
That’s because different people have different objectives.
There isn’t a single strategy out there that’s perfect for everyone.
Here’s the truth.
The best strategy for you will ultimately be the one that’s best suited for your financial goals.
Since I don’t know what your goals are, it’s impossible for me to say which strategy might be the best for you.
However, I can tell you which strategy I’ve used, and I’ll tell you why I think it’s a phenomenal strategy for many other people out there.
That might include you, Jess.
The strategy I’ve personally used to achieve a significant amount of wealth and passive income at a young age is, dividend growth investing.
Let me quickly explain what it’s all about.
This strategy essentially involves buying shares in world-class enterprises that are paying their shareholders reliable and rising cash dividend payments.
Growing dividends are funded by growing profit.
And the growing profit comes about because these world-class enterprises are providing the products and/or services the world demands.
Take Apple Inc. (AAPL), for example.
They make a ton of money because consumers crave their products and services (like the iPhone and Apple Music) and are willing to pay for them.
In fact, Apple tends to make more money year in and year out, because they’re usually able to raise the prices on their products and services while simultaneously selling more products and services to more people.
And shareholders, being the collective owners of Apple, deserve their fair share of that growing profit.
That’s where a growing cash dividend comes in.
Apple has been paying a growing cash dividend for eight consecutive years.
You can check their track record on the Dividend Champions, Contenders, and Challengers list, which contains data on more than 800 US-listed stocks that have raised dividends each year for at least the last five consecutive years.
There are many companies on that list that have been paying a growing cash dividend for more than 25 years!
A growing cash dividend serves as a great litmus test for business profit and quality.
Can’t write that check if the profit isn’t there. And the profit isn’t there if you’re not running a great business.
Dividend growth investing allows you to filter out all of the enterprises out there that aren’t able and/or willing to pay you, the owner of a publicly traded company, a growing cash dividend payment.
Fellow contributor Dave Van Knapp penned an excellent series of educational articles on this strategy.
Make sure to read his Dividend Growth Investing Lessons for more on what DGI is all about, why it’s so powerful, and how to effectively execute it.
How powerful is it?
Well, let’s put it this way.
I started dividend growth investing at 27 years old, when I was still flat broke. Actually, I was in debt at that time. So I was less than broke.
By applying the principles that Dave Van Knapp discusses in his Lessons, I went from below broke at 27 years old to financially free and retired at 33 years old.
That’s right.
I was able to retire. At 33 years old. Only six years after starting out in debt.
It might sound unbelievable.
But that’s the power of dividend growth investing.
I now control the FIRE Fund which is my real-money early retirement stock portfolio.
It’s chock-full of high-quality dividend growth stocks that pay me growing dividends.
And I live off of the five-figure passive dividend income the Fund generates on my behalf.
My six-year journey from zero to hero is laid out in my Early Retirement Blueprint.
That’s a step-by-step guide that almost anyone can follow to their financial independence and early retirement dreams, using dividend growth investing as a cornerstone of that trek to wealth and passive income.
I can’t say if dividend growth investing is the best strategy for you, Jess.
However, I can tell you that it has undoubtedly and radically changed my life for the better.
It’s simple to understand. Simple to execute. And simple to enjoy the wealth and passive income it can lead to.
But that wealth and passive income won’t come about if you don’t start.
That’s true no matter what strategy you decide to use.
If you decide that dividend growth investing is the best strategy for your objectives, we’ve got you covered with plenty of great investment ideas.
I provide a compelling long-term dividend growth stock investment opportunity every Sunday.
These ideas are shared in the Undervalued Dividend Growth Stock of the Week Series.
I screen for fundamentals, competitive advantages, risks, and valuation.
And I only share the best stocks I can find.
It’s ultimately up to you, Jess, to determine which strategy is best for your goals.
But I think you should take some time to read about dividend growth investing and what it might be able to do for you.
It could change your life. It changed mine.
Regardless of what strategy you decide to pursue, the most important thing is that you 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.