You can double your money in perfectly safe, well-known dividend stocks. But only if you know the secret! Novice income investors gravitate toward higher current yields, but often that can result in hitching your sleigh to stagnant stocks with equally stagnant dividends.
For monster total returns, we want to pay attention to dividend increases. Because these hikes don’t just bump up the yield on your initial investment – they also trigger stock-price increases, too. If a stock is already paying out 3% but then juices its payout by 10%, investors will see that new 3.3% yield and buy more shares. That buying will drive the stock’s price up, and the yield back down, eventually toward 3%.
Just consider Visa (NYSE:V), which almost always sports a current yield of less than 1%. Is it a dividend laggard? Hardly. As of November’s 19% jolt to the payout, Visa stock now pays 150% more than what it did in early 2014 … and shares have chased the dividend 175% higher!
Ignore Visa’s Tiny Yield at Your Own Peril