Income and Growth, A Powerful Combination

As investors continue to look for income in a yield-starved market, I see two mistakes being made consistently. One is focusing on just absolute current yield. While it may seem to make sense to maximize your income today, investors should not overlook the need for income to grow in the future. No matter what the official inflation statistics may say at the moment, we all know that the real cost of living goes up steadily over time. Your income needs to grow, so a portion of your income portfolio should consist of stocks expected to offer strong dividend growth.

The second mistake I see is chasing yield regardless of fundamentals. Fortunately we can use Portfolio Grader to assemble dividend-paying growth stocks with excellent fundamentals. Companies with strong earnings growth should be able to increase your payout and see the stock price go up as fundamentals continue to improve.

Source: InvestorPlace

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