One great reason to invest in companies with growing dividends is the powerful effect they can have on your income.
One way of looking at stocks is what you are getting as a dividend yield on the original purchase price.
For Bank of Montreal (TSX-BMO), after some 29 years, I am getting a yield of almost 40% on my original investment. For this bank, my income is up 571%. That is the dividend has grown at the rate of 6.2% per year. BMO was one of the first stocks for me to buy.
For Fortis (TSX-FTS) after 24 years, I am getting a yield of almost 26% on my original investment. My dividend income on this stock has grown 269%. My income from this stock has grown at the rate of 7.9% per year.
Another favourite stock of mine, which is another bank, is Royal Bank (TSX-RY). I have had this stock for around 17 years. I am getting 31% dividend yield on my original investment. My dividend income has increased by 660% since I bought this stock. The increase in income from this stock is 12.6% per year.
I realize that these figures are not taking in inflation over the years, but they do illustrate the power of increasing dividends.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.