Updated: February 17, 2016
It’s easy to beat the stock market – just buy stocks in companies that pay dividends, and boost their payouts every year.
While dividends help you “cash out” of your investment over time, the annual raises are what really make you money. Let me explain…
Even after a 15% pullback, the S&P 500 yields just 2.3% today. Which means if you buy an index fund today, and you never saw a dividend increase, it’d take you more than 40 years to get your initial investment back in cash.
Fortunately companies with growing earnings often do pass their higher profits along to shareholders. And you can really accelerate your returns by buying only those that increase their payouts annually.
According to Ned Davis Research, 80% of the total return of the S&P 500 since 1960 can be credited to the compounding and reinvestment of dividends. …