(This was originally published in the August 2016 version of The Dividend Growth Newsletter. It is available here.)
What if we were to define retired persons as people who no longer need to keep saving money in order to live the life they want? Retiring early means amassing savings derived from both active income and passive income – as quickly as possible.
The secret to a faster savings rate is to increase passive income starting today. Ongoing increasing passive income offers additional peace of mind and a buffer in case retirees outlive their retirement plans.
Investing in Dividend Aristocrats offers a diversified, lower-risk method to consistently increase passive income.
Case in point: 10 years ago, Coca-Cola’s quarterly dividend was $0.16 with an annualized dividend yield of 2.91%. Today, that dividend is now $0.35 with an annualized yield of 3.22%. It doesn’t seem like much, but at $21.92 per share on Aug. 4, 2006, the dividend yield based on cost today is now 6.38% and passive income has more than doubled over the past decade!
(This was originally published in the July 2016 version of The Dividend Growth Newsletter. It is available here.)
Let me re-phrase: What if you knew how the stock market would behave over the next four to eight years – does that alter your plans?
The Dow Jones rose 85.74% during Bill Clinton’s first term and a further 70.01% during his second term. But, the Dow fell 7.65% during George W. Bush’s first term, and then another 15.2% during his second term.
If you planned on converting your portfolio to income from growth, or if you planned to make a large withdrawal to fund a purchase, Donald Trump could dramatically affect your lifestyle.
The analysis is much more than just Democrat vs. Republican, but the booming Eisenhower and Reagan (staunch right-wing Republicans) years indicate the stock market responds to spending, not ideology – the stock market loved road building and defense spending.
The real question should be: If Bill’s administration built the information highway, what will Hillary’s administration build? Or, perversely, if terrorists were afraid enough of Bush to bomb the World Trade Center, how afraid are they of Trump?