By: Dividend Sensei
The bottom line is that if you think you can time the market to boost returns, you are almost certainly wrong. You’re not going to be able to call the exact top or bottom in almost anything. But the good news is that if you buy quality income producing assets, at good prices, such as undervalued dividend growth stocks, you pretty much can’t lose. That’s as long as you have a diversified portfolio, and hold long enough for exponentially rising payouts to lift their share prices. Historically these appreciate at the same rate as long-term dividend growth.
Total return = yield + dividend growth
Keep that in mind the next time you worry over the random fluctuations in some dividend stock you own. In fact the best way to boost your returns is to ignore your portfolio entirely. Don’t check it every day, every week, or even every month. What do I do? I don’t focus on price at all. Rather I have every stock I own tracked on Seeking Alpha. When news breaks, such as earnings, or dividend announcements, I can quickly check to make sure that the fundamental investment remains intact. 99% of the time that is the case.
As long as the dividend is safe and growing that’s all I care about. I only focus on the magic formula to getting rich over time; yield + dividend growth. Never forget that long-term value investors almost can’t lose, while short-term speculators almost never win.