.floatimg-left-hort { float:left; } .floatimg-left-caption-hort { float:left; margin-bottom:10px; width:300px; margin-right:10px; clear:left;} .floatimg-left-vert { float:left; margin-top:10px; margin-right:15px; width:200px;} .floatimg-left-caption-vert { float:left; margin-right:10px; margin-bottom:10px; font-size: 12px; width:200px;} .floatimg-right-hort { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 300px;} .floatimg-right-caption-hort { float:left; margin-right:10px; margin-bottom:10px; width: 300px; font-size: 12px; } .floatimg-right-vert { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px;} .floatimg-right-caption-vert { float:left; margin-right:10px; margin-bottom:10px; width: 200px; font-size: 12px; } .floatimgright-sidebar { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px; border-top-style: double; border-top-color: black; border-bottom-style: double; border-bottom-color: black;} .floatimgright-sidebar p { line-height: 115%; text-indent: 10px; } .floatimgright-sidebar h4 { font-variant:small-caps; } .pullquote { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 150px; background: url(http://www.dmbusinessdaily.com/DAILY/editorial/extras/closequote.gif) no-repeat bottom right !important ; line-height: 150%; font-size: 125%; border-top: 1px solid; border-bottom: 1px solid;} .floatvidleft { float:left; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} .floatvidright { float:right; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} Dear Mr. Berko:

Dear B.R.:

I agree. Stocks that have a long history of consecutive dividend increases usually do better in a flat or down market than those issues that don’t pay dividends. Unlike most professional investors, I believe consistent, long-term dividend growth is a very reliable measure of future principal growth. Long-term dividend growth is a consequence of increasing revenues, increasing net income, good profit margins and excellent management.

Patient investors are more comfortable owning a portfolio of dividend growth issues in a down or sideways market, because quarterly dividend payouts partially offset or cushion the decline in market values. And if the dividends are reinvested, they will acquire new shares at lower prices, which reduces their basis.

Investing for dividends is not as exciting as buying a stock at $25 and hoping because of your copious research that it will trade at $40 in nine months. Or buying 1,000 shares of a $6 stock and praying it will run to $7 because you got a hot tip from a friend. With dividend growth stocks, you don’t have to hope or pray. Just be patient while everyone around you is “high fiving,” and let the growing dividends work for you. It’s the story of the tortoise and the hare — slow but sure, while those around you are pulling their hair.

Consider Abbott Laboratories (ABT-$53.30), a $34 billion revenue pharmaceutical that continues to post solid results year after year after year. It has a squeaky-clean balance sheet, and debt is only 39 percent of capital. Though its stock performance hasn’t set the world on fire, its average annual dividend increases have averaged 8.4 percent for 37 years, which should warm the cockles of any investor’s heart. ABT’s dividend has doubled about every 8.5 years. So if you bought one share of ABT currently paying $1.76 and held it for 40 years, the original dividend could grow to about $45 per share. Now, think about what your $1,000 investment would be worth if you reinvested every dividend, every quarter, for 40 years.

McDonald’s Corp. (MCD-$67.27) sells hamburgers, cheeseburgers, french fries and shakes in nearly every country in the world, except for Sudan and North Korea. MCD has increased its dividend an average of 16.9 percent for 33 consecutive years. So if MCD’s current $2.20 dividend would grow at that rate for the next 40 years, it would reach $113. Imagine what a $1,000 investment today would be worth 40 years hence if you reinvested every MCD dividend.

Johnson & Johnson has increased its dividend 7.4 percent per year for 47 consecutive years. Coca-Cola has increased its dividend an average of 7.9 percent every year for 47 straight years, and Procter & Gamble has increased its dividend an average of 7.3 percent for 53 straight years. Now, if you invested $1,000 in each of those issues today, and if those stocks do as well in the future as they did in the past, that $5,000 investment would be worth millions, and your daughter, who would be 56 in 2050, may never have to worry about retirement.

My dad gave my sister a formula for success when she graduated from high school. He said, “From birth to 18, you need good parents,” and I think she had that. “From age 18 to 35, you’ll have to rely on your good looks,” and my sister had that. “From 35 to 55, you will need a dynamite personality, and from 55 on, you are going to need a good stream of dividend and income.” Today, my sister is comfortably retired and as happy as a posy in a pumpkin patch.

Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, Fla. 33775 or e-mail him at mjberko@yahoo.com. © 2010 Creators.Com