The Positive Psychology Of Dividend Growth Investing

It is widely accepted that many investors sabotage themselves by making emotional rather than rational decisions. Statistics show that many investors underperform the very instruments that they invest in. How is this possible? They trade too much and time their trades poorly. As an example, many investors in one of the S&P 500 index funds, such as (SPY), have fallen well short of the total return that SPY actually delivered over the past 5 years. This happened if they sold in fear when SPY was getting hammered in the crash of 2008, then did not wait to get back in until the market recovery was well under way.

When I began following a dividend growth strategy about 7-8 years ago, my view of stock ownership changed in many ways. What I want to focus on in this article is how it changed my psychological approach to the market. Prior to becoming a dividend growth investor, I viewed my stocks as opportunities to gain or lose money from the market. After adopting dividend growth investing, I view the stocks that I own as providing opportunities to profit from the successes of the companies themselves. The psychological impact should be obvious: The shift of attention from the market to the companies resulted immediately in less trading. The less that I was concerned with the prices of my stocks, the less I was concerned with opportunities to trade them.

Source: Seeking Alpha

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