Why Today’s Small Dividend Could Become Tomorrow’s Retirement Engine
The article highlights that focusing on current dividend yield may overlook the power of dividend growth. Microsoft increased its quarterly dividend from $0.08 in 2005 to $0.91 currently, illustrating how small dividends can become a retirement engine.
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Why Today’s Small Dividend Could Become Tomorrow’s Retirement Engine
According to 24/7 Wall St., a stock screener sorted by current yield misses one of the most powerful income stories in the market: dividend growth. Instead of chasing high current yields, investors may benefit from focusing on companies that consistently raise their dividends.
Details
For example, Microsoft (NASDAQ: MSFT) now pays $0.91 per quarter, up from $0.08 per quarter in 2005. This significant growth turns small past dividends into a substantial income stream today. Similarly, Visa (NYSE: V) most recently paid $0.67 per quarter, with an annual dividend of $2.68.
Context
This strategy also applies to companies like Johnson & Johnson (NYSE: JNJ), Procter & Gamble (NYSE: PG), and Coca-Cola (NYSE: KO), which have long histories of dividend increases. Investors who buy and hold these stocks can benefit from compounding dividends.
What It Means for Investors
Instead of chasing high current yields, focusing on future dividend growth may be more rewarding. Companies that regularly raise dividends often have strong fundamentals and can provide a growing income stream over time, making them suitable for retirement goals.
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