2022 was a horrendous year most investors would rather forget.
But for me, it was a year to remember.
For those who would rather forget it, please do not take a swing at your computer as you read the next paragraph. I promise I will let you in on my secret.
I found plenty of great deals on high-quality companies and I got a huge raise in my dividend income. I’m sleeping well at night and more than happy with my portfolio’s performance.
All thanks to one little strategy I’ll share with you today.
2022 – A Year in Review
But before I tell you how I beat the market, let’s take a look at why most people aren’t happy with their investments:
Stocks went down. Bonds went down. Inflation made everything more expensive.
The S&P 500 ended the year down 19.4%. It was the index’s worst performance since 2008.
During the year, the Dow Jones Industrial Average logged 8 consecutive weeks of declines from March to the end of May. It was the longest losing streak since 1932.
Long-term bonds lost more than 30% as the Fed raised interest rates at a rapid pace.
But as the saying goes, “It’s a market of stocks, not a stock market.” And for investors who followed our advice of buying high-quality dividend growth companies at reasonable valuations, 2022 was not nearly as bad as the headlines made it seem.
One popular dividend growth ETF we recommended was the Schwab US Dividend Equity ETF (SCHD). After taking into account the dividends it paid, SCHD lost only 3.2% last year.
Though that’s still a loss, dividend growth companies held their value much better than the broader markets. And that lower volatility did wonders for our peace of mind when it seemed like everything else was crashing.
SCHD’s dividend growth strategy ensures that it keeps growing its income and is very likely to pay higher dividends every year. And since it holds many of the highest quality companies on the market, the share price will eventually take care of itself.
On top of that, 2022 was an outstanding year for increases in dividend income.
The Strategy
We have a database that tracks more than 700 dividend growth companies. The average dividend increase in 2022 was 10.9%. That higher income easily beat inflation and gave dividend growth investors more money to reinvest in stocks that had fallen to cheap valuations.
Some companies rewarded shareholders with truly outstanding dividend increases:
-
Lowe’s (LOW) raised its payout by 31%. That’s the 60th consecutive year of dividend increases for the company.
-
Carlisle Companies (CSL) hiked its dividend by 39%. That’s a 48-year streak.
-
Tractor Supply (TSCO) is a relatively newer dividend grower with only 13 years under its belt. But it bumped its payout up by a whopping 77%.
I think it’s safe to say that dividend growth investors are more than happy with how their portfolios performed over the past year compared to the rest of the market. Lower volatility and greater income is an excellent recipe for sleeping well at night.
This is exactly what we’ve been talking about since we launched Wide Moat Research, and we’re seeing it play out as we expected right now. The data shows that our dividend growth strategy is working and we’ll keep using the same approach for investing in 2023 and beyond.
If you want to get in on the action, SCHD is a quick and easy way to add some dividend growth companies to your portfolio.
Tonight, we are publishing the latest edition of the Intelligent Income Investor. This premium service provides a model portfolio, trade alerts, and special reports on the highest quality dividend-paying companies the market has to offer. If you are interested in trying out my market-beating dividend growth strategy firsthand, click here to find out more.
Happy SWAN (sleep well at night) investing,
Brad Thomas
Editor, Intelligent Income Daily
P.S. For those who lost a significant part of their portfolio in 2022, we have an upcoming service that will help you get back on track. The author behind the service, our very own Adam Galas, used this strategy to help his uncle reset his retirement portfolio after losing $1 million in the crypto crash this year.
If you are in a similar position, stay tuned for more information on the upcoming service we are launching next week!