This is my personal investing strategy that I use to grow a consistent cash flow from businesses I invest in. In essence, it is very simple, I Earn, I Save, I then Invest.
I follow a passive investing strategy called Dividend Growth Investing. It is not a get rich quick type of strategy, but a get rich one day type of approach with slow, steady, but very real results (dividends). I consider myself a long-term investor who buys investments to hold on to them forever. There are some very rare exceptions that I do sell business ownership and mostly that is due to company's deterioration of fundamentals such as dividend cuts. I don't do any kind of day or option trading. I focus on investing into very high quality companies that have long histories of distributing their profits by paying growing dividends to shareholders. These same companies are also known as Dividend Champions (Aristocrats) and they tend to increase their dividend payouts on annual basis consistently regardless recession, depression, war, or any other political or economical event. These dividend increases benefits the shareholders enormously overtime as dividend cash flow received continuously grows larger on annual basis. A good example of this would be getting a pay raise every single year without asking for one, because a shareholder is a true part owner of the public company invested and dividends are our claims.
Once the company pays the dividend to its shareholders, the dividends are then are automatically deposited straight into my brokerage account. I then reinvest all of the dividends I receive from these companies manually when my capital allocation gets accumulated anywhere from $1,000 to $3,000. I stop using DRIP program since it costs $0 for me to purchase company stocks with my brokerage. With more capital reinvested regularly, my share ownership of these companies continuously grows and with increased amount of shares I own, then my future dividend payouts increase simultaneously as well. Its like one thing feeding another thing. Plus, I work for a living so I love bringing fresh capital to invest in world class businesses. I like to think of it as a never ending compounding machine or virtuous cycle of mathematical wealth building. The portfolio receives dividends and then I try automatically buy more company shares. By rinsing and repeating this strategic investing philosophy over time, the proceeds uninterruptedly compound and grow the cash flow in the form of dividend income and with dividend income continuously growing, this makes the shares more and more valuable over time to future investors and retirees. Which essentially grows the total value of the investments in the portfolio and income. Win & win!
Time is extremely important and valuable tool here, since we cannot control it. It is our most valuable resource of our lives, which is slowly slipping away day by day, year by year. That is why it is paramount to invest as early as possible, so that over time, the compound interest can work its magic by compounding the reinvested dividends, interest on interest or dividends on dividends, annual dividend increases, share buybacks, company's organic growth, earnings growth, retained earnings growth and currency inflation to grow the portfolio of investments into a tremendous passive income stream of forever cash flow. This is why Dividend Growth Investing is such an exceptional wealth building strategy that can be created to supplement regular job income and most importantly, income stream during retirement years and beyond.
This strategy is used by many including one of the most famous investors by the name of Ben Graham and Warren Buffett.