Dividend stocks can make you rich. It's as simple as that. While they don't garner the notability of high-flying growth stocks, they're also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine.
In fact, a study by C. Thomas Howard published in Advisor Perspectives found that for every percentage point a stock's yield rises, its annual return increases by 0.22 percentage points if it's a large cap, 0.25 if it's a mid cap, and 0.46 if it's a small cap. Even better, Howard found that dividend-growing stocks outperformed dividend cutters by 10 percentage points per year from 1973 to 2010 and beat both flat- and no-dividend stocks. And the icing on the cake is that Howard showed that this outperformance came with a third less volatility. Higher returns, less volatility-induced stress, and a steadily growing income stream -- three powerful aspects of dividend growth investing that can help you grow your wealth.
In this video, Motley Fool analysts Joe Tenebruso and Eric Bleeker discuss five elite businesses that have grown their dividends substantially during the past year. But more important to investors today is to identify the companies that will grow their dividends substantially in the years ahead. If you're interested in hearing about some more companies that are likely to boost their dividends from this point forward, we'd like to offer you a brand-new free report from Motley Fool expert analysts called "Secure Your Future With 9 Rock-Solid Dividend Stocks." Today I invite you to download it at no cost to you. To discover the identities of these companies before the rest of the market catches on, you can access this valuable free report by simply clicking here now.
Eric Bleeker, CFA, has no position in any stocks mentioned. Joe Tenebruso has short April 2014 $55 puts on Starbucks. The Motley Fool recommends and owns shares of Apple, MasterCard, Starbucks, Visa, and Whole Foods Market. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.