Dividends, Investing

What’s the secret to dividend investing?

By Kanwal Sarai
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The secret to dividend investing is buying stocks that consistently increase their dividends. You as the investor then has to have the patience to hold on to those stocks. This rewarding approach to investing requires patience and time.

In 2000, I purchased 185 shares of TransCanada Corporation (TRP) at $13.40 each, for a total investment of $2479. But since then I have received $4606.50 in dividends alone from TRP. Here’s a list of TRP dividends from the last 17 years:

Year Dividend per share Dividends Earned
2000 $0.80 $148.00
2001 $0.90 $166.50
2002 $1.00 $185.00
2003 $1.08 $199.80
2004 $1.16 $214.60
2005 $1.22 $225.70
2006 $1.28 $236.80
2007 $1.36 $251.60
2008 $1.44 $266.40
2009 $1.52 $281.20
2010 $1.60 $296.00
2011 $1.68 $310.80
2012 $1.76 $325.60
2013 $1.84 $340.40
2014 $1.92 $355.20
2015 $2.08 $384.80
2016 $2.26 $418.10
Total $4,606.50

The dividends alone represent a 85.8% return on investment. Additionally, the stock price today is $63.44 up from $13.40 back in 2000.

Can you see the importance of dividend increases? Regardless of the stock price, TRP has continued to increase dividends consecutively for more than 17 years. Over time the dividends alone have more than paid for the initial investment. Also this $2479 investment will generate another $462.50 in dividends this year (18.6% return), and if history is any indication the dividends will continue to rise in the future.

Think TRP is a unique stock? Here’s a list of companies providing over 50 years of consecutive dividend increases:

Colgate-Palmolive (53 years)
Lowe’s (54 years)
Johnson & Johnson (54 years)
Coca-Cola (54 years)
3M (58 years)
Procter & Gamble (60 years)

As you can see this approach to investing rewards the patient and disciplined investor. The key is to buy these quality dividend paying stocks when they are undervalued, then hold for the rising income (dividends).

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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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