Today, we start a four-part series on dividend income with a controversial topic: low-yield, high-growth dividend stocks at retirement. To fully get the magic of dividend growers, we go back to why a company pays a dividend in the first place and what creates a low or a high yield. Learn how growth protects your portfolio from inflation and preserves your wealth while generating income at retirement.
- What makes a company pay a dividend? And what makes it pay a low or a high yield? To fully benefit from a dividend growth stocks strategy, the answer to those questions is essential.
- The dividend mechanic is not magic, but some magic is still happening. Dividend growers must be able to grow their sales and profit accordingly to maintain their dividend growth policy. Therefore, dividend growth is the result of investing in great businesses that are thriving.
- But then, why are low-yield stocks ignored? Mike destroys some misconceptions in this regard.
- Another misconception is that retiring on low-yielders is dangerous. We discuss the main advantages of investing in low-yield, high-growth stocks. The first one is the exposure to 5 factors:
- Market beta
- The second main advantage is long-term wealth preservation. Mike explains how.
- The last is sustainable income growth, which is a protection against inflation.
- Should you sell all your high-yield stocks at the end of this episode? Not at all! We explain what could be the solution instead.
- If retirees have low-yield, high-growth stocks at retirement, how do they create income?
- Vero wants to add a note on high-income products like split corps and covered calls. Do they represent good options?
In this video, Mike discusses 3 Covered Call ETFs to see if they’re worth it in terms of beta, characteristics, allocation, and total returns.
You can read more about Covered Call ETFs below.
Covered Call ETFs – Income Strategy
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