Dividend investing focuses on companies that consistently pay and grow dividends, offering a steady income stream and potential for wealth compounding. Dividend growth stocks are attractive due to their combination of income and capital appreciation. Investors should prioritize yield on cost (YOC) over high yields from distressed stocks. Companies with sustainable payout ratios and strong fundamentals can build portfolios that secure financial stability. Visa exemplifies this strategy, achieving substantial total returns while increasing dividends, showcasing the effectiveness of dividend growth investing.
Visa operates the world's largest payment network, facilitating transactions between merchants, banks, and consumers. Its asset-light model generates high margins, making it a cash flow machine.
A stock with a modest initial yield but strong dividend growth can deliver a high YOC over time, potentially turning a small initial investment into a significant income stream.
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