Warren Buffett said, “If you don’t find a way to make money while you sleep, you will work until you die.”
This concept might seem tricky to some, but it’s easier than you’d imagine.
I’ve been sleeping peacefully – and making money while I do so for years.
365 days of the year, I’m generating passive income… without lifting a finger.
Let me show you how…
My team and I monitor a list of 713 U.S. companies that pay reliably increasing dividends.
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362 of these companies have increased their annual dividends for at least 10 years.
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144 of them are on annual dividend increase streaks that have lasted for 25-plus years. We call these stocks “Dividend Champions.”
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And of these Champions, there are 43 companies that have increased their annual dividends for 50 years or more. These, we call “Dividend Kings.”
During 2021, across this entire list of 700+ stocks, only seven (less than 1%) cut their dividends.
And not a single Dividend Champion cut its dividend in 2021.
2020 was a difficult year because of the COVID-19 recession, so it saw more dividend cuts.
118 U.S. companies with established dividend streaks slashed their dividends.
However, only five of them came from the Dividend Champions list.
In short, longevity matters, in terms of dividend safety.
What Matters When It Comes to Dividend Streaks
It’s not a coincidence that companies with long dividend growth streaks continue to provide durable income.
For a company to have the means to pay out a reliably increasing dividend over the long-term… it must generate reliably increasing fundamentals.
Otherwise, a rising dividend wouldn’t be sustainable, and the house of cards would eventually implode.
When looking for these kinds of companies, we want to see operational success marked by rising sales, earnings, and cash flows. That tends to result in a virtuous cycle.
Let me break it down for you…
Rising sales generate awareness, and that increases brand value.
Over time, this contributes to strong pricing power, bigger margins, and increased cash flow.
That allows companies to invest in research and development and outpace potential competition via mergers and acquisitions.
And most importantly, things like valuable brands… strong cash flows… desirable market share… and projections of future growth allow blue-chip companies to attract top talent.
All these things create a wide moat, an important business goal, that I laid out in last week’s article here. A wide moat allows companies to compete well against potentially disruptive peers.
The fact is no one can predict the future. But I believe excellence never happens by accident.
Winning is contagious… Which is why I always want to be partnered with winners in the stock market.
I can’t think of a better way to make money while I sleep than to own shares of the best companies in the world that pay out reliably increasing dividends.
My strategy is simple: Accumulate shares of the safest, highest-quality dividend growth stocks I can find.
Then, once I own these positions, my next course step is easy: Do nothing.
That’s all it takes to make money while you sleep… If you know which stocks to own.
If you’re wondering how to select the best dividend payers, we manage three portfolios at the Intelligent Income Investor which are full of our favorite picks for safe and secure passive income.
One is even called the SWAN (sleep well at night) Portfolio and I don’t know about you… but I get my best rest when I know that I’m making money while I’m dreaming.
Happy SWAN investing,
Brad Thomas
Editor, Intelligent Income Daily
P.S. If you are interested in hearing more about the SWAN Portfolio, you can check it out and get one of my favorite ideas for free here.