Durable Dividends

Stressed Out About Your Retirement Plans? Give Dividend Growth Investing A Try

Nick Ward

56 postsMay 10, 2021

Portfolio management can be an incredibly stressful endeavor.

This is especially the case for someone who is just getting started in the markets.

There are copious investment strategies to pursue, each with pros and cons that can be difficult to weigh against one another. Every day there are more and more investment vehicles being created. It’s very rare that you’ll ever hear two equity analysts agree on a price target regarding a particular stock. Simply put, there are far too many variables at play at any given one point in time for there to be true consensus. And this uncertainty can easily lead to fear, which then serves as a roadblock between one’s current financial situation and eventual financial freedom.

Because fear and greed rule the market in the short-term, irrational volatility is a near-constant in the investment markets. The unreasonable ups and downs that investors see on a daily basis can convince anyone that Wall Street is nothing more than a gambler’s paradise.

Rest assured, I don’t believe that this is the case.

Sure, there will always be traders who, in my opinion, would be better off spending their time in a casino. But, that doesn’t mean that there aren’t ways for more conservative investors to generate wealth using reliable, data driven strategies…dividend growth investing, first and foremost in my mind.

When it comes to long-term success, you’ll hear people like me point towards wide moats, strong balance sheets, and secular trends, preaching discipline and patience, and saying that like, “Ignore the short-term share price movements in your portfolio and instead, focus on the growth of the underlying fundamentals produced by the companies that you own.”

If you’ve followed me over the years, you’ve probably heard me say that buying and holding onto shares of blue chip dividend growth companies over the long-term is the simplest and easiest way to generate significant wealth in the markets. I continue to believe that this is the case.

However, it can be very difficult to buy into a thesis that ignores momentum, and instead focuses on rather boring things like fundamental strength and dividend growth, on faith alone.

Without true experience, it’s impossible to form a foundation of faith in these underlying fundamentals and the eventual upside potential they represent.

And believe me, I know it’s tempting to fall in-line with the herd that is chasing the popular momentum trade of the day.

It’s easy to fall in line with the masses. There’s safety in numbers, right?

Well, while this may be true in the wild, I don’t think it’s true in the markets.

Why? Because human beings are largely governed by fear and greed and these two emotions, time and time again, have proven to be pitfalls for investors.

Harkening back to the father of value investing, Benjamin Graham, we arrive at the famous quote, “In the short run, the market is a voting machine but in the long run it is a weighing machine.”

In short, given enough time on the scales of financial justice, the power of sentiment is overpowered by the weight of fundamental metrics like earnings and cash flows.

And, this isn’t just a fancy quote. I’ve been managing money long enough to know that eventually, fundamentals do matter.

I’ve seen too many examples of mean reversion take place to allow fear to dissuade me from taking advantage of attractive value.

Buying shares of high quality companies when they’ve been beaten down by an irrational market is the first step towards financial freedom. The second is simply holding onto them, allowing the passive income that they generate to compound over the long-term, eventually snowballing into an avalanche of sorts, which can more than cover your expenses in retirement.

And yet, I acknowledge that buying shares into weakness like this can be scary because playing the contrarian role and going against the herd’s mentality requires a high degree of conviction, which is usually hard to come by without experience.

So, in this piece, rather than attempt to convince you that it’s not only possible to sleep well at night with an overweight equity exposure, but to also outperform the broad markets while essentially ignoring share price movement once you’ve accumulated shares of blue chip companies, I’ll simply show you graphics which clearly make the case.

A picture is worth 1,000 words, right? Or, in this case, thousands of dollars.

Let’s take a look at a few charts, showing the long-term share price performance versus the long-term dividend growth.

I’ve included 3 charts; one, of Johnson and Johnson (JNJ), a quintessential defensive healthcare holding, known for its 59-year dividend increase streak, Realty Income (O), a real estate investment trust, which has been paying out a monthly dividend for more than 50 years, and Lowe’s (LOW), a well known big-box retail play with a 58-year dividend increase streak, which has proven its strength in recent years, even as growing eCommerce threatens the traditional retail space.

As you’ll quickly see, while the share prices of these three stocks (as represented by the black line on the F.A.S.T. Graphs below) have been quite volatile (therefore, potentially stress inducing and worrisome) during the last couple of decades, if an investor focuses instead on the reliably growing nature of the dividends that these wonderful companies produce (which is represented by the white line on the F.A.S.T. Graphs below) then it is likely to make long-term ownership, throughout short-term volatility in the markets, more palatable.

Johnson and Johnson

Realty Income

Lowe’s

Lastly, you’ll notice that while there are ups and downs (sometimes violently so) on the black lines above, the fact is, over the long-term (these are 20-year charts) the clear trajectory is up and to the right.

In other words, investors who’ve been patient with these types of stocks have not only generated a predictably increasing passive income stream, but also market beating total returns.

All 3 of these stocks are holdings in The Intelligent Dividend Investor portfolio. We were able to use our disciplined, value-oriented focus to purchase shares of all three of these blue chips at wonderful prices which has led to wonderful returns.

If reliably increasing passive income and a low-stress portfolio management style seems appealing to you, please click on the link below and join the IDI community!

Nick Ward

56 posts

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Nicholas Ward is a research analyst who currently writes for Seeking Alpha, The Dividend Kings, iREIT, and Forbes Real Estate Investor. Before that, he was Founder and Editor-in-Chief of The Dividend Growth Club, as well as the Income Minded Millennial. Nicholas has also contributed to Sure Dividend, Investing Daily, and The Street, where he covered stocks in Jim Cramer's Action Alerts PLUS Portfolio.

Nicholas holds a bachelor of arts from The University of Virginia, where he studied English and studio art. Prior to transitioning into the financial industry, he managed a vineyard in the foothills of the Blue Ridge Mountains.

Inflation, Inflation, Inflation

REIT Mutual Fund	Symbol
Alpine Realty Income and Growth Fund	AIGYX, AIAGX
American Century Real Estate Fund	REAIX, REACX, AREEX, AREWX, ARYCX, AREDX
Real Estate Securities Fund	MRESX
AR Capital Real Estate Income Fund	ARIAX, ARICX, ARIPX
AssetMark Real Estate Securities Fund	AFREX
Aston/Harrison Street Real Estate Fund	AARIX, ARFCX
Baron Real Estate Fund	BREIX, BREFX
BlackRock Real Estate Securities	BIREX, BAREX, BCREX
Brookfield U.S. Listed Real Estate Fund	BRUAX, BRUCX, BRUIX, BRUYX
CGM Realty Fund	CGMRX
West Loop Realty Fund	REIIX, REIAX, REICX
Cohen & Steers Institutional Realty Shares	CSRIX
Cohen & Steers Realty Income Fund	CSEIX, CSDIX, CSBIX, CSCIX
Cohen & Steers Realty Shares	CSRSX
Columbia Real Estate Equity Fund	CREAX, CREIX, CRRVX, CRERX, CREEX, CRRFX, CREWX, CRECX, CREBX
Compass EMP REC Enhanced Volatility Weighted Fund	CWRAX, CWRIX, CWRTX, CWRCX
Davis Real Estate Fund	RPFRX, DREYX, DRECX, DREBX
Delaware Real Estate Investment Trust Portfolio II	DPRTX, DPRBX
Delaware Real Estate Investment Trust Portfolio	DPREX, DPRSX, DPRRX, DPRCX
DFA Real Estate Securities Portfolio	DFREX
Dunham Real Estate Stock Fund	DAREX, DNREX, DCREX
DWS RREEF Real Estate Securities Fund	RRRRX, RRREX, RRRAX, RRRSX, RRRBX, RRRCX
DWS RREEF Real Estate Securities Income Fund	REFAX, REFCX, REFIX, REFSX
Eaton Vance Real Estate Fund	EAREX, EIREX
EII Realty Securities Fund	EIIRX
Fidelity Advisor Real Estate Fund	FHEIX, FHEAX, FHETX, FHECX, FHEBX
Fidelity Advisor Real Estate Income Fund	FRIRX, FRIQX, FRINX, FRIOX
Fidelity Real Estate Income Fund	FRIFX
Fidelity Real Estate Investment Portfolio	FRESX
Fidelity Spartan Real Estate Index Fund	FSRNX, FRXIX, FSRVX
Fidelity Series Real Estate Equity Fund	FREDX, FREFX
Fidelity Series Real Estate Income Fund	FSREX, FSRWX
Forward Real Estate Long/Short Fund	KSRYX, FRLSX, FFSRX, KSRAX, KSRCX, KSRBX
Forward Real Estate Fund	FPREX, FFREX, KREAX, KRECX
Forward Select Income Fund	KIFYX, FSIMX, FFSLX, KIFAX, KIFBX, KIFCX
Franklin Real Estate Securities Fund	FREEX, FRLAX, FRRSX, FSERX
GMO Real Estate Fund	GMORX
Goldman Sachs Real Estate Securities Fund	GREIX, GRETX, GREAX, GRESX, GRERX, GREBX, GRECX
Great-West Real Estate Fund	MXREX
Heitman REIT Fund	OARTX, OBRTX
ING Real Estate Fund	CRARX, IREWX, IDROX, CLARX, CRWRX, CRCRX, CRBCX
INVESCO Real Estate Fund	REINX, IARFX, IARIX, IARYX, IARAX, IARRX, IARCX, AARBX
Ivy Real Estate Securities Fund	IRSAX, IREIX, IRSYX, IRSRX, IREEX, IRSCX, IRSBX
John Hancock Real Estate Securities Fund	JIREX
Johnson Realty Fund	JRLTX
J.P.Morgan Realty Income Fund	URTLX, JRIRX, URTAX, URTBX, URTCX
J.P. Morgan Security Capital U.S. Core Real Estate Securities Fund	CEEAX, CEERX, CEEFX, CEESX, CEECX
J.P. Morgan U.S. Real Estate Fund	SUSIX
Lazard U.S. Realty Equity Portfolio	LREIX, LREOX
Lazard U.S. Realty Income Portfolio	LRIIX, LRIOX
Manning & Napier Real Estate Series	MNRIX, MNREX
Morgan Stanley Institutional U.S. Real Estate Portfolio	MSUSX, MUSDX, MSULX, MURSX
Natixis AEW Real Estate Fund	NRFAX, NRFYX, NRFBX, NRFCX, NRFNX
Neuberger Berman Real Estate Fund	NBRIX, NBRFX, NREAX, NRERX, NRECX, NRREX
Nuveen Real Estate Securities Fund	FREAX, FARCX, FRSSX, FREBX, FRLCX, FREGX
Oppenheimer Real Estate Fund	OREAX, OREIX, OREYX, ORENX, OREBX, ORECX
PHOCAS Real Estate Fund	PHREX
PIMCO RealEstateRealReturn Strategy Fund	PRRSX, PETPX, PETAX, PETDX, PETCX, PETBX
Pioneer Real Estate Shares	PWREX, PYREX, PCREX, PBREX
Principal Real Estate Securities Fund	PIREX, PIRPX, PREPX, PRETX, PREJX, PRRAX, PRERX, PRENX, PRAEX, PRCEX, PRLEX
ProFunds Real Estate UltraSector ProFund	REPIX
Prudential Select Real Estate Fund	SREAX
Prudential U.S. Real Estate Fund	PJEAX, PJEZX, PJECX, PJEBX
REMS Real Estate Income 50/50 Portfolio	RREIX
REMS Real Estate Value-Opportunity Fund	HLRRX, HLPPX
Rydex Real Estate Fund	RYREX, RYHRX, RYCRX
SA Real Estate Securities Fund	SAREX
SEI Institutional Mgd Real Estate Fund	SETAX, SEIRX
Spirit of America Real Estate Income & Growth Fund	SOAAX
SSgA Clarion Real Estate Fund	SSREX
Stratton Real Estate Fund	STMDX
T.Rowe Price Real Estate Fund	TRREX, PAREX
TIAA-CREF Real Estate Securities Fund	TIREX, TRRPX, TRRSX, TCREX
Vanguard REIT Index Fund	VGSNX, VGRSX, VGSLX, VGSIX
Virtus Real Estate Securities Fund	PHRAX, PHRIX, PHRCX, PHRBX

REIT ETF	Symbol
Flex Shares	ASET
Wisdom Tree Global Ex-US	DRW
S&P 500 Equal Weight	EWRE
iShares FTSE Industrial/Office	FNIO
MSCI Real Estate Index	FREL
S&P REIT Index	FRI
First Trust S&P REIT	FRI
iShares Real Estate 50	FTY
Flexshares Global	GQRE
iShares Cohen & Streers	ICF
iShares International Developed RE	IFGL
iShares US RE	IYR
Premium Yield Equity REIT	KBWY
ETRACS Monthly Pay 2x Leverage	MORL
Market Vector Mortgage	MORT
iShares Global REIT	REET
iShares FTSE Mortgage	REM
iShares Residential	REZ
IQ US Real Estate Small Cap	ROOF
iShares FTSE NAREIT Retail	RTL
DOW Jones Global RE	RWO
SPDR Dow Jones	RWR
Schwab US REIT	SCHH
Super Dividend REIT	SRET
ProShares Ultra RE	URE
Vanguard REIT	VNQ
Vanguard Global ex-US	VNQI
iShares International Developed	WPS
Wilshire US REIT	WREI
Pacer Benchmark Data & Infrastructure RE	SRVR
Pacer Benchmark Industrial RE	INDS
Pacer Benchmark Retail RE	RTL
Hoya Capital Housing	HOMZ
NetLease Corporate RE	NETL

REIT Name	Ticker	Annual Increases/yr
Federal Realty	FRT	51
Universal Health Realty	UHT	33
National Retail Properties	NNN	29
Realty Income	O	27
Tanger Outlets	SKT	26
Urstadt Biddle	UBA	25
Essex Property Trust	ESS	25
W.P.Carey	WPC	22
National Health Investors	NHI	17
Equity Lifestyle	ELS	15
Digital Realty	DLR	15

Stressed Out About Your Retirement Plans? Give Dividend Growth Investing A Try

Nick Ward

56 postsMay 10, 2021

Johnson and Johnson

Realty Income

Lowe’s

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Stressed Out About Your Retirement Plans? Give Dividend Growth Investing A Try

56 postsMay 10, 2021

Johnson and Johnson

Realty Income

Lowe’s

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