3 Dividend Stocks To Buy In Your 20’s: American States Water (AWR), Apple (AAPL), and Microsoft (MSFT)

Investing in stocks has seemingly never been more popular. When I first started investing in stocks back in 2010, everyone thought I was nuts. Buying stocks was definitely not cool or even all that common back then.

Even my own family laughed at me when I told them I was gonna become financially independent and retire by 40 years old. Yet now, thanks largely to the internet, the idea of buying stocks is seen as completely mainstream.

I was almost 28 years old when I first started investing. So I know what it’s like to be in your 20s and looking for great investments for the very long term.

Today, I want to tell you about three stocks to strongly consider buying if you’re in your 20s. These three stocks are high-quality dividend growth stocks that have a ton of long-term potential.

All three stocks are growing like crazy and taking advantage of huge megatrends.

Now, these stocks don’t offer huge yields. But that’s okay, because you have decades to let the compounding process play out and exponentially increase your wealth and passive income.

If you’re in your 20s, you should be focusing on quality and growth over yield.

High-quality stocks growing their profits and dividends at very high rates should provide for outstanding long-term returns and a ton of aggregate dividend income.

Ready for some fantastic long-term dividend growth stock ideas for those of you in your 20s?

Let’s dig in.

Stock to Buy in Your 20’s #1: American States Water (AWR)

The first stock I want to tell you about is American States Water (AWR). American States Water is a water utility business.

A utility? For your 20s? Hear me out. Water is becoming liquid gold. This will be one of the most important resources of the coming decades. Companies like this one that provide safe drinking water and wastewater services are incredibly valuable.

This isn’t like an electric utility with a high yield and slow growth rate. This stock is the opposite.

AWR only yields 1.7%. But check the growth out. We made a video a while back that showed how this compounding machine turned $1,000 into $300,000 over a period of only 30 years.

Plus, this is a king among king when talking about dividend growth stocks.

It has the longest dividend growth track record in the world, at 66 consecutive years. And they’re really just getting started. I mean, it’s not like society is going to need less water in the future.

The stock isn’t super cheap, with its P/E ratio of 33.

But I’ve never seen this stock cheap in my 10+ years of investing. It’s the kind of stock that should be expensive. And if you’re in your 20s, any kind of short-term overvaluation will smooth itself out over the next 50 years of compounding anyway. I only wish I could go back in time and buy this stock myself back when I was still in my 20s.

Stock to Buy in Your 20’s #2: Apple (AAPL)

The next dividend growth stock you should definitely take a look at if you’re in your 20s is Apple (AAPL).

Apple is basically a must-own stock for serious dividend growth investors, especially if you’re a young dividend growth investor.

Warren Buffett has called it the best business he’s ever seen. I concur. And if you’re young, you have to be in tech. Tech is taking over our world. Apple is obviously known for its smartphones, which is one of the biggest megatrends we have. But Apple does more than just smartphones or tech. It’s an everything business – tech, healthcare, content, payments, etc.

They do everything. More importantly, they do it extremely well. Another thing they do extremely well? Investment returns. This stock has compounded at an annual rate of over 30% over the last 20 years. That’ll double your wealth every 2 1/2 years!

They’re also growing that dividend of theirs. They’ve increased their dividend for nine consecutive years, and they’re really just getting warmed up. They’re taking in more than $60 billion in net income per year now, which leaves plenty of money to return to shareholders.

And with almost $100 billion in total cash on the balance sheet, this dividend isn’t going anywhere but up.

The stock isn’t cheap, with a P/E ratio of 36. And it only yields 0.6%, so you’ll need that profit and dividend growth to rationalize the investment. But if you’re in your 20s, you have plenty of time for that growth to compound away. This is almost a perfect stock for young dividend growth investors.

Stock to Buy in Your 20’s #3: Microsoft (MSFT)

The third stock is Microsoft (MSFT). Another tech play? Well, not quite. Like Apple, Microsoft is becoming an everything business.

They have their Windows OS that you already know about. But they’re also massive in areas like data, cloud, gaming, and networking. Each one of these is a megatrend – and Microsoft is in all of them. That said, yes, this is a tech business. And that’s a good thing.

If you’re young, you shouldn’t just be in tech – you should be overweight tech. Microsoft has been a monster investment. It’s compounded at 28% annually over the last 20 years. Think that’s impressive? It gets even more impressive.

I’m gonna share a secret with you. Microsoft is growing faster now than it was before.

It’s getting better as it gets bigger. We recently put together an analysis and valuation video highlighting that accelerating growth, which goes to show how truly amazing this business is. And the crazy thing is, the stock doesn’t look all that expensive.

Our video makes the argument that the stock isn’t as pricey as it should be. Although it only yields 0.9%, it’s really that growth you’re after. And that growth will show up in the dividend. Microsoft has increased its dividend for 19 consecutive years, with a 10-year dividend growth rate of 14.3%. And there’s plenty more where that came from.

I view this as the safest dividend in the world. And it’ll likely provide more aggregate dividend income over the next few decades than a lot of stocks starting out with higher yields but offering riskier and/or slower-growing dividends.

If you’re not in your 20s, no worries. We’ve got more videos coming out that’ll cover investors in their 30s, 40s, 50s, and 60s.

Stay tuned for those videos. Meanwhile, an investor of almost any age would likely do well with any of these three businesses. But if you’re an investor in your 20s, you should even more strongly consider one or all of these dividend growth stocks for long-term investment. Your future self 40 or 50 years from now will be thanking you, because that future person could be a multimillionaire living off of six-figure annual dividend income.

— Jason Fieber

P.S. If you’d like access to my entire six-figure dividend growth stock portfolio, as well as stock trades I make with my own money, I’ve made all of that available exclusively through Patreon.