Dividend Growth Investing Bi-Weekly Chat: A Space for Sharing Ideas and Concepts

The article discusses Dividend Growth Investing (DGI), a strategy that focuses on investing in stocks with a history of consistently increasing dividends. It highlights BDCs (Business Development Companies) and their recent performance, as well as the importance of valuations in DGI. The article also introduces the concept of a "SAWN" portfolio, which provides a hassle-free and relatively stress-free investment exposure. Additionally, it discusses the role of dividends in times of economic uncertainty and presents RQI as a stock with a 7%+ yield for building an income portfolio.

Dividend Growth Investing (DGI) is a strategy that focuses on investing in stocks with a history of consistently increasing dividends. This approach offers investors a steady stream of income while also providing potential capital appreciation. In the current economic landscape, where uncertainty persists, dividends play a crucial role in providing a stable income stream.

Business Development Companies (BDCs) are a key player in DGI. These companies invest in debt and equity securities of small and mid-cap companies. Recent performance data shows that BDCs have been resilient, offering attractive yields and growth prospects. However, valuations are crucial in DGI. Overvalued stocks can lead to disappointing returns, while undervalued stocks may offer better long-term prospects.

One popular strategy for DGI is the "SAWN" portfolio, which stands for "Stable, Affordable, Well-Balanced, and Non-Cyclical." This portfolio aims to provide a hassle-free and relatively stress-free investment exposure by focusing on stable dividend-paying stocks across various sectors. The "SAWN" portfolio helps investors navigate market volatility and economic uncertainty by offering a diversified income stream.

Exchange-Traded Funds (ETFs) are a popular choice for implementing DGI strategies. Several ETFs specialize in dividend growth, offering low-cost exposure to a basket of dividend-paying stocks. For instance, the Schwab US Dividend Equity ETF (SCHD) Build Income & Growth with 5 ETFs: SCHD, VIG, DGRO, VYM, SDY^[1] tracks the Dow Jones U.S. Dividend Index and has an expense ratio of 0.06%. The ETF yields 3.93% and includes holdings in companies like Amgen, AbbVie, and Home Depot.

Another notable ETF is the Vanguard Dividend Appreciation Index Fund ETF (VIG) Build Income & Growth with 5 ETFs: SCHD, VIG, DGRO, VYM, SDY^[1], which tracks the S&P U.S. Dividend Growers Index. With an expense ratio of 0.05%, VIG offers a yield of 1.59% and includes holdings in Microsoft, JPMorgan Chase, and Apple. The ETF has shown resilience, rallying from a low of $170 in April to $217.27 as of September 2025.

The iShares Core Dividend Growth ETF (DGRO) Build Income & Growth with 5 ETFs: SCHD, VIG, DGRO, VYM, SDY^[1] is another popular choice, offering low-cost exposure to U.S. stocks focused on dividend growth. With an expense ratio of 0.08%, DGRO yields about 2.2% and includes top holdings like Apple, Microsoft, and Johnson & Johnson.

In times of economic uncertainty, dividends provide a lifeline for investors. They offer a tangible return on investment and can help mitigate the impact of market volatility. RQI is a stock with a 7%+ yield, making it an attractive option for building an income portfolio. However, investors should always conduct thorough due diligence before investing in individual stocks or ETFs.

In conclusion, Dividend Growth Investing offers a strategy for investors seeking a consistent income stream. BDCs, ETFs, and the "SAWN" portfolio are all viable options for implementing DGI strategies. By focusing on stable dividend-paying stocks and considering valuation, investors can build a robust income portfolio that weather economic uncertainty.