Grow Your Income by 60% Thanks to This Bear Market

Dividend Growth, Dividend Investing

With the stock market down across the board, investors who were looking for capital gains are in a bad spot.

But as share prices go down, you can get the same dividend payments for less money. In other words, dividend yields are going up.

Right now, I’m looking at the yields from my Dividend Hunter recommended investments to see how I can reinvest as much as possible to compound the current great yields.

I think you’ll like what I see…

Abstract image of dollars, spreadsheets, graph gridlines, and up arrow to evoke market and business activity

I regularly remind my subscribers that with dividend reinvestment, your portfolio income will grow every quarter – no matter what happens to the share prices.

If you invest to provide a future income to support your planned retirement, doesn’t it make sense to focus on growing your income stream? Investing for cash returns lets you compound the growth of your current investment income with the knowledge that the income will always grow.

You cannot say that about investing for capital gains. The first half of 2022 graphically illustrates how the best-laid retirement plans can be destroyed by a sharp downturn in the stock market.

Let’s do some easy math to see the potential for growing your investment income to fund your future retirement.

With stock prices down, the current average yield for my Dividend Hunter recommendations list currently sits at 9.6%. Historically, the average runs in the eight percent range. Low share prices make growing your income work even better.

Let’s start with a $250,000 portfolio. Dividends are paid monthly and quarterly, so let’s divide 9.6% by four to get a quarterly cash flow of 2.4%. Initially, the portfolio earns an income of $6,000 per quarter or $24,000 per year.

Using a compound interest calculator, let’s compound the income instead of the account value. The investor.gov calculator lets you put in rate variance, so I used 9.6% as the expected return with one percent variance above and below. I picked quarterly compounding.

After five years, the $24,000 of income grows to $38,566. That’s a 60% growth of your income, no matter what happens in the stock market. At an 8.6% compounding rate, the income would be $36,726.

Going out ten years, the annual income would grow to $61,974. Again, it doesn’t matter what happens with share prices. You have increased your portfolio income from $24,000 to over $60,000 in ten years.

To recap, if you focus on investing for income, and then reinvesting that income, you can automatically and surely grow your future income. Adding additional money along the way will raise your cash flow even faster to a greater future income stream.

My own 401k plan is 100% invested in the Dividend Hunter recommendations. I make regular monthly contributions and contribute close to the legal maximum. I have no real idea about my stock returns, but I know that my account income doubles every two years. I can count on a handsome retirement income when I get ready to do so six or eight years down the road.

To get started yourself, take a look at my 36-month plan to turn your retirement account into an income-generating machine. Just click here.

Buy and Hold These 3 Dividend Stocks Forever

What's the one thing you need to stay retired? That's right... cash. Money to pay the bills. Money to weather any financial crisis like the one we're in now and whatever comes next. I've located three stocks that if you buy and hold them forever, they could serve as the backbone to your retirement. Click here for details.