Dividend investing is a robust investing style.
Dividend stocks have outperformed non-dividend paying stocks over the last 85 years. The image below shows this outperformance:
Since its inception in January 2012, the long book of the Voss Value Fund, Voss Capital's flagship offering, has substantially outperformed the market. The long/short equity fund has turned every $1 invested into an estimated $13.37. Over the same time frame, every $1 invested in the S&P 500 has become $3.66. Q1 2021 hedge fund Read More
Strangely, there are few well-known quotes about dividend investing. The reason for that is beyond me… But this article will help fix the dearth of dividend investing quotes.
Keep reading to see 5 dividend investing quotes that highlight the importance of dividends in your investing strategy.
“The very attention we place on rising dividends puts us squarely in the position of ‘owners’ of a company, of true investors who understand that a satisfying and reasonable return from a stock investment isn’t a gift of the market or luck or the consequence of listening to some market maven, but it is the logical and inevitable result of investing in a company that is actually doing well enough, in the real world, to both pay dividends and to increase them on a regular basis”.
– Lowell Miller
At its core, investing is fractional ownership of businesses. Thinking in this way, it could not be more obvious that owning business that grow and make lots of money is better than owning unprofitable businesses.
When a business pays regular dividends, and regularly increases its dividends, it is signaling that it is both profitable and growing – that’s exactly the type of business all investors should be looking for.
“Successful investing is about owning businesses and reaping the huge rewards provided by the dividends and earnings growth of our nation’s – and, for that matter, the world’s – corporations.”
– John Bogle
John Bogle is the retired CEO of the Vanguard Group. He helped reduce fees for the average investor by popularizing ETFs.
Bogle’s logic is very simple. Investing is about owning businesses and reaping the rewards of their growth.
These rewards come in the form of both business growth and dividends. The larger a dividend paying business grows, the more dividends it will pay shareholders.
“The good thing about the dividend-paying stocks is, first of all you have stocks, which are real assets if we have some inflation. I think we’re going to have 2%, 3% maybe 4%. That’s a sweet spot for stocks. Corporations do well with that. It gives them pricing power. Their assets move up with prices. I’m not fearful of that inflation.
– Jeremy Siegel
Dividend paying stocks are real assets. When you own a share of a dividend stock, you own a small fraction of that business. One share of Coca-Cola (KO) entitles you to about one four billionth of the company.
As real assets that produce growing income streams, dividend growth stocks are a good choice for fighting the effects of inflation. A company like Coca-Cola has pricing power; they can raise the price of their beverages to offset the effects of inflation.
“Dividends may not be the only path for an individual investor’s success, but if there’s a better one, I have yet to find it”
– Josh Peters
Josh Peters is the author of The Ultimate Dividend Playbook. I completely agree with the quote above. Dividend investing is perfectly suited to individual investors.
When you purchase shares of a high quality dividend growth stock, you don’t have to do anything else. A truly high quality business will compound your investment over time – increasing in value while simultaneously paying ever-growing dividends.
Other investment methods can work as well. Value investing is a robust strategy, but requires vast amounts of time to uncover undervalued securities. Once (if) they reach fair value, you must find new undervalued securities to take their place.
Another fruitful investing style is momentum investing. This entails purchasing stocks that have done well in recent history. While this strategy can be effective, it produces high portfolio turnover and transaction costs which erode much of the outsized gains of the strategy for individual investors without access to hedge-fund-level rapid trading and ultra-low transaction costs.
“Do you know the only thing that gives me pleasure? It’s to see my dividends coming in.”
– John D. Rockefeller
John D. Rockefeller was one of the richest men of all time. He owned Standard Oil and profited immensely from the transition to fossil fuels in the United States.
Standard Oil was split into several different companies. Today, ExxonMobil (XOM) is the largest publicly traded oil corporation in the world – and the successor to Rockefeller’s standard oil. Given the pleasure Rockefeller received from his dividends, it’s only fitting that today ExxonMobil is one of only 52 Dividend Aristocrats – stocks with 25+ years of dividend payments without a reduction.
Dividend investing is popular with individual investors because it produces solid returns without taking up all of an individual investor’s time.
This article outlined 5 quotes from famous investors or dividend investing practitioners. Hopefully, more individual investors will come to see the efficacy of dividend investing in the future as this method of investing is uniquely suited to the individual investor.