Why I Continue Rolling the Dice and Buying More of This 5.7%-Yielding Dividend Stock in My Retirement Account

As a long-term investor, I have been consistently adding to my position in a particular 5.7%-yielding dividend stock in my retirement account. While this may seem like a risky strategy, I believe that the potential benefits outweigh the risks. In this article, I will explain why I continue to roll the dice and invest more in this dividend stock.



Firstly, the high dividend yield of 5.7% is a significant attraction. This means that the stock provides a steady income stream, which is crucial for a retirement portfolio. While the yield may not be the highest in the market, it is still competitive and offers a solid return on investment.

Secondly, the company has a consistent history of raising its dividend. This indicates financial stability and a commitment to returning value to shareholders. For instance, in 2025, XYL (Xylem) raised its dividend by 11% to $0.40 quarterly, while TRI (Thomson Reuters Corporation) raised its dividend by 10% to $0.595 quarterly. This consistent dividend growth suggests that the company is generating sufficient cash flow to support and grow its dividend payments.



Thirdly, the company's dividend growth rate is an important factor to consider. The compound annual growth rate (CAGR) of the company's dividend over 1, 3, 5, and 10 years can provide insight into the company's ability to grow its dividend payments over time. A higher CAGR indicates a more attractive investment for a long-term retirement strategy.

Fourthly, the company's payout ratio based on both free cash flow and net income can indicate whether the dividend payment is sustainable. A lower payout ratio suggests that the company has room to grow its dividend payments in the future. This is an important consideration for long-term investors, as it ensures that the dividend is sustainable and can continue to grow over time.

Fifthly, the company's dividend frequency can also impact the overall appeal of the investment. More frequent payments can provide a more consistent income stream. For example, if the company pays dividends quarterly, it provides four income payments per year, which can help smooth out any fluctuations in the stock price.

However, it is essential to consider the potential risks and challenges associated with this investment. Market volatility, dividend cuts or suspensions, interest rate risk, inflation risk, liquidity risk, and concentration risk are all factors that could impact the stability of the retirement portfolio. To mitigate these risks, it is crucial to maintain a diversified portfolio, monitor the financial health of the companies in the portfolio, and consider their dividend history and growth potential.

In conclusion, the high dividend yield, consistent dividend history, potential for dividend growth, strong financial stability, and potential for capital appreciation make this 5.7%-yielding dividend stock an attractive investment for a long-term retirement strategy. While there are risks associated with investing in this stock, I believe that the potential benefits outweigh the risks, and I will continue to roll the dice and add to my position in this dividend stock. By carefully managing the risks and maintaining a diversified portfolio, investors can help ensure the stability of their retirement portfolio and achieve their long-term financial goals.