The 2,927% Reason to Invest in Dividend Aristocrats

dividend-aristocratsSay you had invested $10,000 in Procter & Gamble (NYSE: PG) stock in 1968.
You liked the consumer goods’ company’s 131-year history of success. You liked that shares were growing consistently but slowly. Most of all, you like that the company had increased its dividend every year for the past decade.
So you enrolled in P&G’s dividend reinvestment program, opting to have the company’s quarterly dividend payouts go towards buying more shares of the promising stock.
This morning, 46 years later, you still own Procter & Gamble shares, and are still invested in their DRIP. Your original $10,000 investment has ballooned to $302,788, a total return (including dividends reinvested on a compounding quarterly basis) of 2,927.9%. On one stock, you can now retire comfortably.
Such is the power of investing in a reliable dividend grower. More specifically, that’s the power of investing in a Dividend Aristocrat.
If you’re a regular Income & Prosperity reader, by now you probably know about the Dividend Aristocrats. They are the group of public companies that have increased their dividends every year for at least 25 years running. It’s an elite, exclusive group. Only 54 companies make the list.
The list of companies that have increased their dividend for at least 50 years is even shorter. Only 19 companies make that list. And Procter & Gamble is one of them.
The company just increased its dividend for the 58th consecutive year this April. Only four other companies have grown their dividends for longer, and none of them have achieved the same kind of returns as P&G.
Regardless, if you invested in any Dividend Aristocrat 25, 50 or even 60 years ago (Diebold, Inc.), you’ve made a lot of money. If you had invested $10,000 in Coca-Cola (NYSE: KO) stock in 1980, today you would be sitting on $609,454.55.
If you had invested $10,000 in Wal-Mart (NYSE: WMT) in 1985, your investment would have ballooned to $384,552.31 today.
Now, those “shoulda, woulda, coulda” scenarios are easy to talk about in retrospect. But who could have foreseen 34 years ago that Coca-Cola would have been the global dominator it is today? By that same token, how many people predicted 29 years ago that Wal-Mart would continue to be the largest retailer in the U.S. three decades later?
So let’s play out a more realistic scenario. Say you invested 15 years ago in one of those companies. By then, Coca-Cola, Wal-Mart and Procter & Gamble were not only universally recognized blue-chip brands. They were also already well established dividend growers, having each increased their payouts for at least 25 years running.
If you had invested $10,000 in Procter & Gamble in 1999, you would be sitting on a total return (dividends included) of 111.5% – more than double the return in the S&P 500 during that time. P&G shares have only risen 50% over the last 15 years. But the ever-increasing dividend payouts more than double the total return.
Your Coca-Cola and Wal-Mart investments would have also beaten the market despite share price appreciation that has been roughly in line with market’s over the past 15 years. The difference is the dividend growth.
When searching for income, perhaps it’s best not to overthink things. Simply put some money into a well-known company – a Procter & Gamble, a Coca-Cola, a Wal-Mart, whatever – that has been growing its dividend for at least 25 years. Chances are, it will continue to grow that dividend for years to come.
In a few years, you should have a nice, market-beating return.
If you invest in enough Dividend Aristocrats, you should have a pretty impressive portfolio by the time you retire.

8 dividend checks from 1 stock 

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