My "Just Right" Investment Style
And why dividend growth investing strikes the perfect balance.
When it comes to investing, finding the right fit can feel like being Goldilocks in the bear’s cottage. Value stocks are “too cold,” growth stocks are “too hot,” but dividend growth stocks? They’re just right.
Let me share how I landed on my “just right” investment style—and why dividend growth investing strikes the perfect balance.
Value Investing: Too Cold
I grew up in a frugal household. My mom always had a coupon ready, and we rarely bought name-brand items—except for cereal. Every now and then, I could convince her to splurge on Cinnamon Toast Crunch (because, let’s be honest, who can resist, right?)
Naturally, when I started investing, I was drawn to value stocks—bargains that felt like finding a great deal at the store. Value investing focuses on buying companies trading below their true worth, often with the bonus of dividends.
At first, this approach worked well. But over time, my portfolio became scattered with small positions in lots of companies. The lack of significant growth left me feeling stuck. It was steady but uninspiring—like porridge that’s gone cold.
Growth Investing: Too Hot
On the other side of the spectrum is growth investing—chasing companies with big potential for rapid expansion. These stocks are exciting but riskier, and they rarely pay dividends since profits are reinvested for future growth.
As someone who loves a good deal, jumping into growth stocks felt like abandoning my roots. Buying at all-time highs made me uncomfortable (they can't go up forever, right?), and the wild price swings didn’t help either. It was thrilling but too risky—like porridge that burns your tongue.
Dividend Growth Investing: Just Right
Then I discovered dividend growth investing—a strategy that blends the best of both worlds:
Value: You pay a fair price for quality companies.
Growth: These businesses reinvest profits to grow while steadily increasing their dividends.
Income: They offer reliable passive income that grows over time.
So what does dividend growth mean? It’s simple: these companies don’t just pay dividends—they increase them consistently year after year. For example:
Caterpillar has raised its dividend for 30 consecutive years.
Visa started with a modest dividend yield but has grown its payout by over 20% annually for more than a decade.
Dividend growers typically have lower initial yields compared to high-yield stocks because they reinvest much of their profits back into the business—just like growth stocks.
But they also offer stability and can often be purchased at reasonable prices—just like value stocks.
This combination is why dividend growth investing works so well for patient investors. Over time, those growing payouts compound into significant returns while providing a hedge against inflation and market volatility.
For me, this approach aligns perfectly with my goal: building a long-term portfolio that generates enough income to live on in retirement without touching the principal.
Finding Your “Just Right”
If you’re feeling stuck between value and growth strategies, think about your goals and where you are in your journey. Dividend growth investing might be the balanced middle ground you’re looking for—not too cold or too hot, but just right!
What’s your investment style?
Until next time, keep walking!
Jeremy ✌️