A couple of years back, I had the chance to spend a remarkable two weeks in Ireland with members of the Oxford Club during one of the Club’s Wealth, Wine & Wander Retreats. The natural allure of Ireland is as legendary as people say, and it did not disappoint. The cities buzzed with energy, and the Irish folk were exceptionally warm and generous.
One of the best parts of this journey was mingling with the Oxford Club Members and listening to their fascinating stories. These folks came from diverse and successful backgrounds:
There was a woman in her 90s who once reigned as a top salesperson for The New York Times in the 1950s. Unfortunately, despite her success, she wasn’t promoted due to her gender. Determined, she left the company and eventually started her own advertising agency. Then, there was the former top engineer from Chrysler, someone who regularly engaged with Lee Iacocca. His passion for automobiles was evident, especially when our hotel showcased one of the earliest cars ever made. Lastly, an entrepreneur who started a pizza place that grew into a chain later transformed into Godfather’s Pizza, which he sold. Even today, he continues to run multiple restaurants.
What struck me about everyone I met was their self-made success. Despite achieving great milestones, their hard work and wise investments afforded them the comfortable lifestyles they enjoy today. Several members shared that they adhere to my 10-11-12 System of investing in “Perpetual Dividend Raisers”—companies that consistently increase their dividends each year. They weren’t chasing the next trendy stock.
Sure, you might get lucky and stumble upon the next Tesla or Amazon. But the risk is more likely that you’d end up with a stock like Lucid. This isn’t a slight on anyone’s investing skills. It’s just that amidst all the stock hype, those big winners are hard to come by.
Speaking of my stock portfolio approach, here’s what I do: I do take a few calculated risks on stocks that could potentially be huge winners. But if they don’t pan out, no harm done, since I’m careful with how much I invest in them and use 25% trailing stops to mitigate losses.
The majority of my portfolio is invested in Perpetual Dividend Raisers. I aim to own stocks that usually yield 3.5% or more, steadily increase their dividend, and generate robust cash flow to sustain and boost their dividends. With my retirement still years away, I reinvest the dividends to compound my wealth. This strategy was the cornerstone for many Club Members on the trip.
For those unfamiliar with it, here’s a quick rundown: When a company pays dividends, you have the option to take them as cash or reinvest them to buy more shares automatically. Take Chevron, for instance. It pays a quarterly dividend of $1.63 per share, yielding 4.2%. If you bought 20 shares at $156.35 each, you’d earn $32.60 in dividends this quarter. If you choose to reinvest that dividend, you’d buy an additional 0.21 shares at the same price. Of course, stock prices vary, and if the price falls, you’d acquire even more shares, which in turn pay more dividends.
For the following quarter, assuming the dividend remains the same, you’d earn $32.94, which would then be used to buy more shares. That extra $0.34 might seem trivial, but if Chevron keeps increasing its dividend as it has over the past five years, your initial $3,127 could grow over 79% in five years.
To put things into perspective, that growth applies even if Chevron just matched the S&P 500’s historical average, acting as a solid stock that delivers strong yields and reliable dividend growth. Here’s a table showing what that initial investment could become over various timelines.
After just 10 years, your investment could more than triple. In 30 years? You’d have made over 27 times your original amount, not by chasing the latest market sensation, but by holding onto a “boring” dividend stock.
This strategy empowered many of our trip’s Members, allowing them to enjoy luxuries like a stay at Adare Manor, our final destination in Ireland. It was voted Condé Nast’s top resort worldwide, proving there’s nothing mundane about such wisdom in investing.
