3 Tips To Improving Your Dividend Growth Returns

Includes: AAPL, C, GE, INTC, KO
by: Todd Johnson

Investors, with 3 simple actions, can simplify their dividend portfolio and increase their net dividend income. The investor has to avoid the Friday night gossip about Facebook (NASDAQ:FB) or the next hot IPO. Successful dividend investors own boring names and avoid cross contamination from outside media influences with varying stock opinions.Challenge yourself to increase your net dividend income and enjoy a lifestyle with more money to spend.

1. Generate a realistic investment game plan

Everybody is unique and requires a "unique" game plan. My plan is to invest in boring, opportunistic dividend paying stocks. The goal is to produce a reoccurring revenue stream where I do not have to worry about working in my old age.

I suggest writing down what you can and can't do - in terms of investing knowledge. I know how much money I can invest in dividend stocks each month. In addition, I know how much money I am receiving in dividend stocks each month. The key is to not buy an obviously troubled stock such as Citigroup, Inc. (NYSE:C). For the past 5 years the company has been on the front pages of every media outlet. Citigroup has lost an average of 35.3% per year for the past 5 years.

The key is to ignore the obvious losers and focus upon the stocks that have the wind at their back. My game plan is to invest in boring names. Boring stocks attracts fewer traders and more long term buy and hold investors.

The Coca Cola Company (NYSE:KO) basic business model is to sell sugar water around the globe. A recession is not going to hurt society's demand for a diet Coke. The company increases its dividend year in and year out. It is a great idea on your part to reinvest the dividends into new Coca Cola shares. The yield on cost will increase if you implement this strategy.

2. Focus upon simplicity and common sense

General Electric (NYSE:GE) was once the blue chip darling of the stock market. Jack Welch was writing books on how to effectively manage organizations. In 2008, the company's financial division brought the company down to its knees. GE's dividend was cut. GE required Federal money to remain a standing institution. The debt load was too much. An income investor does not need this type of headache.

On the other hand, as an individual investor I can focus upon Intel (NASDAQ:INTC). Most investors know about Intel and its chips in electronic devices. What many investors may not know is the balance sheet is debt clean. Intel pays a 3% dividend yield and is increasing it year by year. The company has a razor sharp focus upon integrated electronics and associated services.

Common sense will tell that Intel is the leading chip maker. Double checking the SEC filings or Intel's annual report will confirm such beliefs. This is a much easier story to read than a conglomerate like GE with multiple divisions and each division is highly competitive in the private sector. Prevent yourself a problem and focus upon the leaders.

3. Avoid the noise

As an investor, it's difficult not to hear Apple (NASDAQ:AAPL) and Facebook stories ad nauseum. If the common investor is hearing these stories every day, then what edge as an individual investor do you have in buying the stock at present levels?

Most folks know that Apple Inc. markets and manufactures technology products complete from hardware to software, from the drawing board to the shelf. Its more well known products such as the iPad, the iPhone, the iTouch all carry the signature "i" stamping the class of the company in terms of product quality and software reliability, inspiring loyalty from all its consumers other competitors are nowhere near matching.

For 2012, Apple released the iPad 3 (officially known as the 'new iPad), the latest in the series of touchscreen tablets that started the entire global demand for the product. A rumored iPhone 5 is supposed to be in the works - the drop in the prices of the latest iPhone model is often the harbinger of the next model in the series of iPhones. Apple is also launching Apple in education, after seeing the speed of learning in children through the touchscreen technology. Along with these two, another brand from Apple, its iCloud service, completes the support for all its mobile devices with the Apple cloud backing each device all the way.

The fear of losing Steve Jobs has been overcome with the launch of the iPhone 4s. Adding the Siri app to the iPhone was a stroke of genius, even while the technology was always there - the Dragon Nuance was developed years ago, and the app simply added a voice to the application. Still, it was enough for the market to have confidence in Apple products aside from losing Steve Jobs - in fact if anything, losing Steve Jobs most probably found a sympathetic market willing to give that confidence to Apple again. But now that the hurdle has passed, the launch of the new iPad 2 is business again as usual - another quality product from Apple with the market over anticipating its release.


Use common sense. Invest in companies that are not hyped in the media. The individual investor lacks any edge over the mutual funds and hedge funds in these cases. Stick with your game plan. Buy boring dividend stocks, reinvest the dividends, keep informed of your investments, and continue to build your investment confidence.

Your life will have a lot less stress and hoopla by owning a sugar water company than a social media coming public with a $500 billion market cap.

A plan is crucial. Sticking to this plan is even more important. Turn off the media and think for yourself. If you listen to all the stories about a company, you will only be more confused and unsure of your investments.

Disclosure: I am long INTC, AAPL, KO.

About this article:

Author payment: $35 + $0.01/page view. Authors of PRO articles receive a minimum guaranteed payment of $150-500. Become a contributor »
Problem with this article? Please tell us. Disagree with this article? .