Thinking about Investing? Start Now

The below chart illustrates the importance of investing early and the power of compounding interest. When it comes to investing time really is on your side.

Case 1:
• $2,000 invested annually in years 1 to 5
• No contributions after year 5
• Assumed rate of return of 10%
• Interest compounded annually.
• All interest is reinvested.
• Total invested $10,000

Case 2:
• No money invested in years 1 to 10
• $2,000 invested annually in years 11 to 40
• Assumed rate of return of 10%
• Interest compounded annually.
• All interest is reinvested.
• Total invested $60,000



You have probably seen similar charts on the front of mutual advertisements and although I’m not a huge proponent of mutual funds I think the underlying message is valid---The earlier you start investing the better.

The Secret to Financial Success

Many people have the view that finances and investing is some kind of mystical puzzle that once solved will instantly eliminate all their financial troubles. The code will be broken and the chest of gold will fly open (just watch any late night infomercial). In my opinion the notion of a financial quick fix is the most dangerous and damaging perspective that anyone can have. Having this view effectively removes individuals from their current financial problems. It rationalizes the belief that you don’t have to diligently and effectively manage your money because once you figure the secret out everything will be OK.

In my opinion the real secret to financial success is the realization that there is no secret, and that for 99.99% of the population (myself included) there is no formula or secret that is instantly going to solve all your financial problems. The real secret to financial success can be found by following these 3 easy steps:

1. Spend less money than you make.
2. Invest your saved money.
3. Repeat 1 and 2 until you can retire.

Well the secret is out...that’s really all there is to it.

Welcome!

Welcome to the launch of the American Dividend Investor!

Purpose of this Blog
This blog was created to educate and inform individual investors about both the benefits of a dividend growth investment strategy as well as provide them with a thorough analysis of individual dividend paying American securities.

It is the hope of the authors that this site will become a resource for both novice and experienced investor alike and will allow readers to gain the tools, resources and knowledge necessary to build their own successful dividend paying portfolios.

What’s So Good About Dividend Based Investing Anyways?

1. It’s common knowledge that over the last 100 years stocks have returned an average of 10%. However, what’s not revealed in that 10% figure is that 50% of the total return consists of dividend.

2. A growing dividend is usually a good indicator that a company is healthy. Annual dividend increases indicate that the executive and director insiders are sufficiently confident in the long term prospects of the business to payout their earnings as dividends.

3. Trading costs are reduced as minimal trading is required in a dividend growth portfolio.

4. Annual dividend growth can protect your income stream against inflation. Additionally, companies with a history of increasing their dividend can usually pass much of the price inflation on to their customers.

5. The share price of the company usually increases with the dividend (ie-you don’t see many high quality blue chips yielding more than 4% because the share price increases with the dividend)