August 2023

Stay Ahead of Inflation With Dividend-Growing Stocks

Last month I explained some of the reasons why investors are interested in dividend stocks, one being their tax-efficiency. Another reason investors like them is because they provide regular income and can help you keep up with inflation.

If that sounds too good to be true, let me explain with some examples.

I’ll use Bell Canada. The chart below shows the annual dividend paid by BCE since 2013.

The dividend in 2013 was $2.32, now it’s $3.87.

Every year, they have increased their dividend by at least 5% except in 2018 which was just slightly below that benchmark.

Let’s assume you purchased 100 shares in 2013 and didn’t add another penny to this investment:

Your income would have gone from $232 to $387, an increase of 66.81%. That’s a pretty decent raise.

Imagine if MOST of the companies in your portfolio were like BCE and they increased their annual dividend every year too?

That’s the power of focusing on dividend-growers vs dividend-payers. Any company can pay a dividend, but the question you must ask yourself is can they sustain an increasing dividend over time?

BCE has grown its annual dividend consecutively for the past 14 years.

Let’s look at the other companies I cover to see how they’ve done over the same time period. The chart below shows the increase in annual income since 2013.