How to build wealth

Good Morning,

I wanted to let you know that I just added to an existing position in a dividend king with a 52 year track record of annual dividend increases. The stock sells for 20 times forward earnings and yields 3.40%. It has a 5 year annualized dividend growth rate of 6.80%. I belive it is a good company, that would deliver decent growth to long-term holders, despite what appears to be headwinds in the near-term. I believe that is an opportunity to deploy money at a decent rate of return, which would hopefully pay rising dividends in the future.

I added to this position in my retirement account.

This is an example of how I build a portfolio, brick by brick.

Building wealth is simple. I just need to identify my goals and objectives, then devise a plan on how to get there. Getting there is a function of items within my control:

1. How much I invest
2. What I invest in
3. How long I stay invested for
4. Keeping costs/fees/taxes/turnover low
5. Managing risk (diversification, knowing when to hold and knowing when to fold)

The goal of this newsletter is to generate $1,000 per month in dividend income. We are getting there by investing roughly $1,000 per month in the best values we could find in the Dividend Growth Investing universe. We are building a long-term portfolio to get there, by investing in good companies and good prices and then holding them. Dividends get reinvested, and turnover and costs and taxes and fees are kept  as low as possible.

This is a blueprint for how I think about investment in general. I invest with the end goal in mind, and then break that down into small, manageable steps to get there. Building a portfolio that generates $1,000/month does not happen overnight. It's a slow, but deliberate process, and taking calculated steps to get there. Building a portfolio is like building a house - you need to ensure you have a strong foundation, good planning and execution. A house does not just come out of the ground like that of course. You need to build it, brick by brick.

The same mindset goes with my investing. I build my portfolio slowly, brick by brick. 

Every new investment I make, brings me closer to my target goal of generating $1,000 in dividends per month.

Every dividend reinvestment also brings me closer to my target goal of generating $1,000 in dividends per month.

Every dividend increase also brings me closer to my target goal of generating $1,000 in dividends per month.

Over time, all those actions compound. And the beauty of focusing on dividend income is that it is stable, resilient and easy to forecast and rely on. It is not volatile like share prices. We are speaking about diversified income portfolios of course, the ones that are comprised of solid-blue-chip companies that have managed to grow dividends for many years. That's the foundation that increases the odds of long-term success.

You can see at any time how far along you are on your journey towards your goals and objectives. As I mentioned in the October 2024 portfolio report, we are on track to generate $3,000 in annual dividend income ( $250/month).  At this rate of investment, the portfolio is on track to generate $1,000 in monthly dividend income by the beginning of the next decade. As I have told you before, and reiterated over the past few years, this is a project aimed at long-term investors, who want to build lasting wealth. If you are interested in get rich quick schemes, this newsletter is not for you. I do wish you well however.

That being said, the best get rich quick scheme is by trying to get rich slowly. That's because most who try to get rich quickly, take unnecessary risks, which usually lead to ruin. Therefore, it takes much longer to build wealth this way, versus just plugging along every month, investing regularly, and patiently waiting for the power of compounding to do the heavy lifting for you. Once you build that snowball, and it starts rolling downhill however, the power of compounding truly starts becoming noticeable...

Those are just a few short thoughts I had this morning. 

You can view the trade confirmation below: