A high starting yield is nice, but a growing dividend is how you build true wealth and beat inflation over decades.
Inflation erodes your purchasing power. $1,000 today will buy less 10 years from now. If your income (like bond interest) stays flat, you are effectively getting poorer every year. This is where dividend growth stocks shine.
Companies like Coca-Cola or Microsoft tend to raise their dividends every year. If a company raises its dividend by 8% annually, your income stream doubles in about 9 years without you investing another penny. This is called "Yield on Cost."
Usually, companies that can consistently grow dividends are profitable and well-managed. Focusing on growth often filters out low-quality "yield traps." While the starting yield might be lower (e.g., 2-3%), the long-term total return often outperforms high-yield alternatives.
Our calculator includes a "Time Machine" feature that shows how dividend growth reduces the capital you need in the future.
DISCLAIMER: Past dividend growth does not guarantee future increases.