Top 5 Dividend Growth Stocks to Buy in July
Have you heard of the magic of compound interest? It's been called the eighth wonder of the world, and it can be an extremely powerful wealth-creation tool. Compounding allows a sum of money to grow faster than simple interest since you are earning returns on top of returns. By investing in dividend stocks and reinvesting your dividends, also known as a dividend reinvestment plan (DRIP), you can harness the power of compounding.
Although I generally focus on growth stocks, my heart has a soft spot for dividend growth investing, and a portion of my portfolio is dedicated to dividend stocks. In fact, "FIRED" in FIRED Up Wealth is an acronym meaning "Financial Independence Retire Early w/Dividends." Traditional dividend growth investing, also known as DGI, is geared toward the growth of the dividend annually to outpace inflation. DGI is often used by income investors, especially in retirement or early retirement.
I like to focus on what I call "Dividend Growth Investing for FIRED stocks," also called DGIF stocks. This is a term I created to identify stocks focused on total growth, meaning the growth of both the dividend and the appreciation of the share price. Here are my general guidelines for DGIF stocks:
Source Fool.com
