How to Become Your Own
Dividend Aristocrat

Another related designation is the Dividend Achiever where the distribution has increased each year for at least 10 consecutive years.

Both terms are trademarked names and are available as an index for individual investors in ETF form.

Past performance is no guarantee of future results, as the fine print always says. But there is still something to be said for a proven track record.

The Power of Dividend Growth Investing

Based on your original investment:

1. In Year 5, your effective yield is 4.39%
2. In Year 10, your effective yield is 7.07%
3. In Year 15, your effective yield is 11.39%
4. In Year 20, your effective yield is 18.35%
5. In Year 25, your effective yield is 29.55%

Improving the Process

I believe in trying to take the "good" and turning it into the "great."

So what factors would improve the results in the example above? The two most obvious factors are: starting with a higher initial yield, and having an investment that produces a higher dividend growth rate. These factors may largely be out of the control of most dividend growth investors, but if you’re willing to learn some simple but powerful option trading strategies, I believe you can creatively stack the deck in your favor on both counts.

An Options-Enhanced Alternative:
Become Your Own Dividend Aristocrat

I detail multiple cost-basis lowering strategies in The Essential Leveraged Investing Guide, but the desired outcome for each individual strategy is the same – paying less for your stocks and squeezing more out of them year after year after year.

And here is a powerful fact: whether you increase the dividend payout by 10% or decrease your cost basis by 10% (and reinvest that "rebate" into more shares at the original yield), the results are identical:

Example A – A $10,000 investment with an initial yield of 3% produces $300 in annual income. Assuming there’s a 10% dividend increase the following year, your original investment would then produce $330 in annual income.

Example B – A $10,000 investment with an initial yield of 3% produces the same $300 in annual income. But assume you were able to safely generate $1000 in option income in that first year, thereby lowering your original cost basis to $9000. If you then reinvested that $1000 into additional shares at the same original 3% yield, even with no increase in the company’s dividend, your dividend income would still be identical to the income in Example A ($300 from your initial investment + $30 from the reinvested $1,000).

Leveraged Investing is not a substitute for long term investing – but it is a potent way to enhance the performance of your long term holdings. It won’t save you from bad investments. But, when combined with savy and smart long term dividend growth investing, it’s designed to either accelerate your dividend growth rate, or to provide the equivalent of dividend growth when your investments fail to produce it on their own.

As the famous Latin proverb states: "When there is no wind, row." And the corresponding Leveraged Investing proverb: "Whether or not there’s dividend growth, become your own Dividend Aristocrat."