2 Steady Dividend Compounders To Form The Core Of Your Portfolio
Written by Summary
The Core of our portfolio is invested in steady dividend compounders.
They are not particularly exciting but they have a path to predictable long-term outperformance with below-average risk.
We highlight two top examples of such companies to consider for your portfolio.
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Eoneren/E+ via Getty Images Co-produced by Austin Rogers
Do you want to know what the most powerful force in the universe is?
Compound interest. Quotes to this effect, calling compound interest the “most powerful force in the universe” or “the eighth wonder of the world,” are usually attributed to Albert Einstein. Truthfully, it is doubtful whether Einstein ever actually said this. But that doesn’t make the notion any less true.Compound interest is the concept that investment income reinvested will build upon itself over time to result in exponential growth in income.Here’s an illustration of the concept, showing the difference between income reinvested (compound) versus income not reinvested (simple): Simple vs compound interest (Corporate Finance Institute) Investing this way is similar to the famous Ernest Hemingway quote about bankruptcy (which Hemingway did actually write in his book The Sun Also Rises ). When a character is asked how he went bankrupt, the reply is:Two ways. Gradually, and then suddenly.When one is investing for compound returns through reinvested income, the process can feel arduously slow and unfruitful. It seems painfully gradual for a long time. But eventually, the exponential growth of one’s income stream kicks in, and what feels like all of a sudden, one’s investment income is growing by leaps and bounds.It takes time and patience, but it is one of the surest ways to create wealth and the best way […]
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