Dividends, Investing

How Would You Like to Give Yourself a Raise?

By Kanwal Sarai
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Success: red graph over coinsWould you like to give yourself a raise? You can by simply investing in companies that regularly increase their dividends.

Dividend increases mean more money in your pocket. An increasing supply of dividends increases your income. You can use that increased amount of money for anything you wish, or re-invest it and earn more for years to come.

Here are some Canadian companies and their average dividend growth over the last 10 years:

18.2% - Canadian National Railway Company (CNR)

13.7% - BCE Inc (BCE)

11.4% - Enbridge Inc. (ENB)

11.1% - Fortis Inc. (FTS)

10.3% - Empire Company Limited (EMP.A)

Most investors understand that Total Return comes from the following two parts:

Total Return = Capital Gains + Dividend Yield

However Kelly Wright (author of Dividends Still Don’t Lie) describes the concept of Real Total Return as:

Real Total Return = Capital Gains + Dividend Yield + Dividend Growth

Now you can see that dividend growth is just as important as capital gains, and dividend yield. Invest in quality undervalued companies with excellent dividend growth and you will become a successful investor!

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Kanwal Sarai

With more than 27 years of investing experience and a passion for investing and teaching, I demystify the world of investing. My goal is to help you grow your net worth by investing in quality dividend paying stocks. Build your own stream of increasing income today.

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Showing 4 comments
  • Dividend Tactics
    Reply

    Often too, a parallel exists between dividend increases and capital gain of an investment (just look at Enbridge's chart for a great example). So if a company shows strong dividend increases, it is quite likely that the overall capital growth is strong as well – a win-win for us dividend investors

    Michael

  • Kanwal Sarai
    Reply

    Well said Michael!

  • Thomas
    Reply

    I just started realizing the potential for dividend stocks in our portfolio. I feel like I have been chasing the wrong things. I would be nice to earn 2-5k with dividends and reinvest and then when the time is right I can use it as income. I still have a lot I need to read over and learn before choosing my picks though.

  • Kanwal Sarai
    Reply

    Thanks for your comments Thomas! The sooner you can start investing the better it is.

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