Dividend Increases: A More Realistic Way to Get Rich

Marc Lichtenfeld
by Marc Lichtenfeld, Chief Income Strategist, The Oxford Club
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It never stops.

Friends, family and acquaintances think that because of my job, my pockets are stuffed with winning lottery tickets. All I have to do is pull one out and give it to them.

Below is an actual text I received last week from a friend.

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Another guy recently demanded I give him a winner. “I need to make some money,” he said.

I explained that if he doesn’t have much money, he shouldn’t be buying risky stocks or other investments. If he was serious about building his wealth, I’d send him a copy of my book, Get Rich With Dividends. He refused the offer. “I just need to make some money,” he reiterated.

It’s easy to get caught up in bitcoin fever or speculate in biotech or other high-flying stocks. And you can make a lot of money that way.

But there are significant risks to those investments, and if you don’t have a strong foundation already, you will not be able to handle the ups and downs of speculative trades.

It’s why I always recommend investors first build a portfolio of Perpetual Dividend Raisers - stocks that raise their dividends every year.

Stocks with annual dividend increases significantly outperform the market and tend to fall less during bear markets and corrections.

Dividend Aristocrats are members of the S&P 500 that have raised their dividends every year for 25 years. Since December 1989, when the Dividend Aristocrat Index was created, Dividend Aristocrats have outperformed the S&P 500 2,297% to 1,243%, including dividends. That’s a greater than 1,000% outperformance.

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And when a bear market hits, collecting the dividend makes it a little easier to handle the lower prices, especially if you’ve owned the stock for a while and the dividend has gone up every year – you could be collecting a strong yield.

Making 5% in dividends definitely takes some pressure off your portfolio in a correction or bear market.

The next time someone asks me for a “tip” on how to make money (and they will), my advice will be the same: Buy great companies that raise their dividends every year and hold them for the long term.

That’s how you turn $1,500 into $2,500. Maybe not as quickly as JD would like, but with a much higher likelihood and much lower risk.

Good investing,


Thoughts on this article? Leave a comment below.

A Dividend Raiser to Make Your Portfolio Healthier

Much of Marc’s research is focused on two parts of the equity market. One is biotech. The other, as Marc’s Oxford Income Letter subscribers know, is dividend stocks.

AbbVie (NYSE: ABBV) is a promising company that fits both categories. Here’s Marc checking on the pick back in August...

Among the drugmakers, AbbVie (NYSE: ABBV) is my favorite.

Since we added it to the Compound Income Portfolio, it’s up 37%, beating the S&P 500 by double digits. Additionally, the company has raised its dividend five times since 2013. And with free cash flow projected to grow 50% by 2021, there should be plenty more dividend increases for years to come...

AbbVie’s biggest seller is Humira. The drug, which is approved for psoriasis, arthritis, Crohn’s disease and several other indications, generated $8.8 billion in sales in the first half of the year. That’s an increase of 14% over last year’s sales - despite competition from generic versions.

But Humira continues to attract new patients. This week, it was approved for reimbursement in Canada for the treatment of ulcerative colitis.

While Humira is still vital to the company’s business, other therapies are gaining importance.

Cancer fighter Imbruvica posted $1.2 billion in sales in the first six months of the year, a 44% gain.

Earlier this month, the FDA and Health Canada approved Mavyret to treat hepatitis C in all major (six) genotypes. Many hep C drugs are approved for only one or two genotypes. The disease affects 3.2 million Americans and more than 130 million others around the world.

The company also received FDA approval for the use of Imbruvica in chronic graft-versus-host disease. It’s a serious condition that affects roughly half of all stem cell and bone marrow transplant recipients.

Imbruvica can now be given to patients who fail to respond to steroids. It’s the first drug that has been approved specifically for this treatment.

AbbVie has 37 drugs in its pipeline, including Rova-T, which is in Phase 2 and 3 trials for small cell lung cancer; ABBV-3067, in Phase 1 for cystic fibrosis; and ABBV-951, also in Phase 1 for Parkinson’s disease.

AbbVie’s deep pipeline and very successful approved products should keep the cash coming in for years. As a result, investors should continue to see AbbVie’s dividend and stock price grow strongly.

- Samuel Taube with Marc Lichtenfeld

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