Let’s talk about one of the most reliable and rewarding investment strategies out there: rising dividend investing. This strategy isn’t just about getting regular income from your investments—it’s about watching that income grow over time. With so many well-established dividend-paying companies in the U.S., there’s no shortage of opportunities to build wealth and pursue financial security. So, grab a cup of coffee and let’s dive in!
What is Rising Dividend Investing?
Rising dividend investing focuses on companies that pay dividends regularly and increase those dividends year after year. These companies are often members of the Dividend Aristocrats, a prestigious group of S&P 500 firms that have raised their dividends for at least 25 consecutive years, the 2025 list has 66 companies included.
When a company consistently raises its dividend, it’s like they’re telling you, “We’re doing well, and we want to share the success.” It’s a sign of financial strength, good management, and a sustainable business model. Plus, these companies tend to be more stable in tough economic times.
Why Dividend Growth Matters
1. Growing Income Stream
Imagine this: You invest in a stock with a 3% yield, and that yield grows by 7% every year. In just 10 years, your income from that investment could double. That’s the magic of compounding. Rising dividend stocks are perfect for retirees who want income that keeps up with inflation—or anyone who likes seeing their paycheck grow.
2. Better Total Returns
Here’s a little secret: Dividends play a huge role in long-term stock market returns. Studies show that reinvested dividends make up a significant chunk of the S&P 500’s growth over time. Companies that grow their dividends often see their stock prices rise too, giving you a one-two punch of income and capital gains.
3. Smoother Ride
Dividend-paying stocks, especially those with rising payouts, are like the steady Eddie of investing. They’re less volatile than non-dividend-paying stocks, making them a great choice for anyone who doesn’t enjoy stomach-churning market swings.
Building a Rising Dividend Portfolio
1. Start with the Dividend Aristocrats
The Dividend Aristocrats are a fantastic starting point. These companies have proven themselves by consistently increasing their payouts for decades. Think of household names like Procter & Gamble, Johnson & Johnson, and now 2025 newcomers like Target and Medtronic. Although I am not making a specific recommendation for the companies mentioned, these are merely examples of consistent companies when you begin your research.
2. Look at Dividend Growth Rates
Don’t just chase high yields. A modest yield with strong growth can be much more rewarding over time. Focus on companies with a history of double-digit annual dividend growth.
3. Check the Fundamentals
A rising dividend is only as good as the company behind it. Look at earnings growth, payout ratios, and cash flow. A company with a low payout ratio has more room to grow its dividend, while strong cash flow ensures it can keep those checks coming.
4. Diversify
Spread your investments across different sectors to reduce risk. This way, if one sector takes a hit, the others can help balance your portfolio.
Why the U.S. is a Great Place for Dividend Investors
The U.S. is a goldmine for rising dividend investing. Many companies here prioritize rewarding shareholders, and the economic environment supports corporate growth. Plus, dividend-focused ETFs like the ProShares S&P 500 Dividend Aristocrats ETF make it easy to invest in a basket of these companies. Note this is not a recommendation for ProShares S&P 500 Dividend Aristocrats ETF, it is only used as example for this article.
To bring it home... "If you don't find a way to make money while you sleep, you will work until until you die" - Warren Buffett
Rising dividend investing is like planting a tree that keeps growing and bearing more fruit. It’s a strategy that combines growing income with the potential for capital appreciation, making it a solid choice for both stability and growth. Whether you’re saving for retirement or just want to grow your wealth, this approach has something for everyone.
While dividend stocks provide income and stability, they can suffer from slow growth, dividend cuts, and sensitivity to interest rates. Additionally, high yields may signal financial distress, and inflation can erode purchasing power if dividends fail to keep pace.
The strategies mentioned may not be appropriate for all investors. Please consult your financial advisors to determine a strategy that works best for you.
Evan R. Guido is the Founder of Aksala Wealth Advisors LLC, a 2018 Forbes Next-Gen Advisors List Member, and Financial Professional at Avantax Investment ServicesSM. Evan heads a team of retirement transition strategists for clients who consider themselves the “Millionaire Next Door.” He can be reached at 941-500-5122 or eguido@aksalawealth.com. Read more of his insights at https://finance.heraldtribune.com/category/ask-guido/. Securities offered through Avantax Investment ServicesSM, Member FINRA, SIPC. Investment advisory services offered through Avantax Advisory ServicesSM, Insurance services offered through an Avantax affiliated insurance agency. 6260 Lake Osprey Dr. Lakewood Ranch, FL 34240. The views and opinions presented in this article are those of Evan R. Guido and not of Avantax Wealth Management® or its subsidiaries. These opinions are based on Evan R. Guido observations and research and are not intended to predict or depict performance of any investment. These views are as of the close of business on 2/13/2025 and are subject to change based on subsequent developments. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. These views should not be construed as a recommendation to buy or sell any securities. Past performance does not guarantee future results. The S&P 500 is an index of 500 major, large-cap U.S. corporations. Standard & Poor's is a corporation that rates stocks and corporate and municipal bonds according to risk profiles. You cannot invest directly in an index. An investment in a money market fund is not insured or guaranteed by the FDIC or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. CDs are FDIC insured and offer a fixed rate of return. They do not necessarily protect against a rising cost of living. The FDIC insurance on CDs applies in case of insolvency of the bank, but does not protect market value. Other investments are not insured, and their principal and yield may fluctuate with market conditions. Investments are subject to market risks including the potential loss of principal invested. Neither diversification nor asset allocation assure or guarantee better performance and cannot eliminate the risk of investment losses. This information is intended to be educational and does not reflect any particular investment or investment needs of any specific investor. Retirement plan withdrawals may be subject to taxation and penalties when withdrawn early. Exchange-traded funds (ETFs), as the name implies, are funds that trade like stocks. A single ETF often attempts to mirror an entire index such as the S&P 500, Dow Jones Industrial Average, or Nasdaq Composite Index; an entire sector of the equities market such as large caps, small caps, growth stocks or value stocks; or whole industries such as technology, energy or biotechnology. In addition, specialized ETFs can cover market niches such as gold, precious metals or REITs, and they can even cover other asset classes like fixed income. Investments that are concentrated in a specific region, sector or industry may be subject to a higher degree of market risk than investments that are more diversified. ETFs are traded like stocks or bonds and offer liquidity throughout the day as opposed to the end-of-day pricing system for mutual funds.