A Special Note from Greg Patrick
Today’s article is a special release from Dave Van Knapp, celebrating the 18th birthday of his real-money Dividend Growth Portfolio.
That portfolio launched on June 1, 2008 — right in the teeth of the financial crisis — with $46,783. Dave has never added another dime of outside money to it.
And yet, 18 years later, the results are remarkable: a steadily rising income stream, more than a decade and a half of real-world compounding, and a portfolio that is now more than five times larger than it was at inception.
This is exactly the kind of real-life dividend-growth investing case study that subscribers of Dividends & Income Select get from Dave on a regular basis.
So to celebrate the 18th birthday of Dave’s Dividend Growth Portfolio, we’re doing something we’ve never done before:
We’re offering 30% off a full year of Dividends & Income Select — but only through June 9, 2026.
The regular price is $499/year.
But through this special anniversary link, you can get your first full year for just $349.30.
That gives you access to Dave Van Knapp’s full premium work, including his complete Dividend Growth Portfolio updates, investing ideas, portfolio strategy, income-focused research, and the broader Dividends & Income Select service.
We do not normally discount this service. This is a rare, limited-time offer created specifically to celebrate this milestone in Dave’s real-money dividend-growth investing journey.
If you’ve ever wanted to go deeper with Dave’s approach — and see how an experienced dividend-growth investor thinks about portfolio construction, income growth, valuation, reinvestment, and long-term compounding — this is the best opportunity we’ve offered.
Get 30% Off Dividends & Income Select
Offer ends June 9, 2026.
On June 1, 2026, my Dividend Growth Portfolio (aka DGP) turned 18! It’s officially an adult!
Joking aside, the DGP is no longer an experiment. It is a long-term IRL case study that illustrates real results of dividend-growth investing over a long period of time.
The DGP’s record is not the product of one benign market environment. It has produced results through:
• the last few months of the Great Financial Crisis and its aftermath
• many years of unusually low interest rates, with two rising-rate periods interspersed
• years of market domination by mega-cap growth stocks
• 2020 Covid crash and quick recovery
• post-Covid inflation surge and sharp rate-hiking cycle that followed
• 2022 bear market, which temporarily interrupted mega-cap tech leadership
• sporadic “broadening” from tech-led growth toward value/dividend stocks over the past two-three years
• economic volatility from inconsistent tariffs (2025-present) and stress from the Iran conflict
I think that history, while not proving anything about dividend-growth investing forever, does make the real-life record more meaningful than back-tests that can use cherry-picked dates and benefit from hindsight.
DGP’s Basic Goals
These are the DGP’s two goals stated in its Business Plan. These have changed little since the portfolio was created on June 1, 2008.
At inception, the portfolio had $46,783 in its initial positions. No new money has ever been added to that initial amount.
Throughout this article, I will use “total returns” to mean price changes + dividends + dividend reinvestments.
DGP’s Performance
Goal #1: Build Reliable, Steadily Increasing Stream of Dividends
This goal has been accomplished.
Beginning with 2009 (the first full year) to the end of 2025, the dividend stream compounded at an annual rate of 10.9% per year.
In 2026, the dividend stream is projected to increase 13%, which will maintain or improve the 10.9%/year dividend-growth rate.
The next chart shows how each year’s dividends are more than the year before due to dividend increases, reinvestments, and compounding. It took 14 years to collect dividends equal to the original investment. Doing it again will happen in less than half that time.
Goal #2. Deliver Appealing Total Returns
The DGP’s total return since inception has been 547%, without any new money ever added to the portfolio.
The display below shows the DGP’s current value vs. what it would have been if the starting money had been put into SPY (S&P 500 ETF), both with dividends reinvested.
The DGP’s total returns compared to SPY have gone through several phases. For the first 10-11 years, they stayed pretty much in sync, with the DGP usually running slightly ahead.
In 2020-21, SPY pulled well ahead as mega-cap tech stocks came to dominate its returns. In 2022, however, the DGP caught and briefly surpassed SPY for the full period since DGP’s inception, as large-cap tech stocks had a down year and SPY fell 18%.
In 2023-24, mega-cap tech again drove SPY higher faster. By 2026, SPY’s Top 10 stocks accounted for close to 40% of the index’s market capitalization. The S&P 500 has no position-size limits, which means that its largest companies can — and in recent years have — dominated the index’s returns.
Another way to see the effect of mega-cap concentration is to compare SPY with Invesco’s S&P 500 Equal Weight ETF (RSP), which contains the same companies weighted equally rather than cap-weighted. Here is their performance over the life of the DGP (6/1/2008 to present).
Overall, RSP has captured 82% of SPY’s overall returns. For comparison, the DGP has captured 84%. Given my goals, yields are important. SPY and RSP yield only 1.0% and 1.5% respectively, compared to DGP’s 3.6%.
Over the past two years, there have been short bursts of market broadening toward value and dividend stocks, but it has not been a persistent trend. Whether it continues is anyone’s guess, especially with trade uncertainty and geopolitical risk in the background.
One important difference between my portfolio and SPY is that I cap position sizes at 5% of the portfolio, reduced from 6% about a year ago. SPY does not cap anything, which strongly tilts its performance toward its largest companies. Just a few weeks ago, SPY’s Top-10 companies made up 41% of the entire index. The other 490 companies shared the remaining 59%, leaving the average non-Top-10 stock at about one-eighth of one percent of the index.
SPY’s largest companies take over the index when they account for so much of it. Morgan Stanley wrote recently that investors in the S&P 500 may think they have exposure to a diversified portfolio, but in fact it is “increasingly a wager on the health of just a few companies.”
The DGP’s position-size limit is deliberate. I want to keep my portfolio well rounded. SPY has no such goal. That has helped its returns when mega-cap tech stocks led the market, but it also creates concentration risk.
Because total return is a secondary goal to income growth, I personally am very satisfied with the lifetime total return picture. The DGP is now 5.5 times larger than it was at its inception, without new money ever having been added to the portfolio.
What I’ve Learned from 18 Years of DG Investing
1. DG Investing Works
When I began the DGP in 2008, it was largely theoretical. I could make projections from past numbers, but would the underlying principles work in the future, in the real world? I wanted to find out, because the idea of a substantial, ever-growing income stream was so intriguing.
Now, 18 years later, I know that DG investing works. In a nutshell, the results have been:
• The portfolio now generates – in a single year – cash income that is the equivalent of nearly 20% of my original outlay.
• The income consistently grows faster than 10% per year. As a result, the current 19.8% yield on my original cost will up to around 22% a year from now and 24% the year after that. At that rate, the income alone will replicate the original investment every four years.
• While capital growth is not the main objective, the value of the portfolio has more than quintupled, without any new money ever having been added since the DGP kicked off in 2008.
To be honest, the outcomes still surprise me a little. My wife and I both invest this way, and we have created income and wealth that was not in my imagination 18 years ago. Indeed, we are spending from our investments, but they grow anyway.
2. There are Lots of Dividend-Growth Stocks to Choose From
Dividend-growth stocks are stocks that increase their dividends every year. If a company grows its payout five years in a row, it qualifies in my book as a DG stock.
There are usually around 700 such stocks. Some fall from the list if they are acquired, or cut or freeze their annual dividend, while others ascend to the list when they reach the 25-year mark of uninterrupted increases.
I focus on what I consider the best ones. Visit my Idea Hub here.
3. Some DG Stocks Are More Attractive than Others
DG investors are interested in metrics like a stock’s yield and rates of dividend growth. Those two metrics are independent from each other, but we want good combinations.
For that reason, I created the following Dividend Power Matrix to define 16 “flavors” of DG stocks, such as Low Yield/Fast Growth and High Yield/Average Growth. Stocks across the spectrum can be of interest to a variety of investors.
Author
The most attractive stocks – with the best combinations of yield + dividend growth – are colored green. Many combinations can be attractive, from Low Yield/Steep Growth to High Yield/Slow Growth.
Many DG stocks fall in the yellow areas of the matrix and are also attractive. Many iconic DG stocks have dividend profiles like this: Average Yield/Average Growth. An example would be a stock yielding 3% that grows payouts at 6% per year.
Many stocks’ prices, over time, roughly follow their dividend-growth rates. They can be investment gems over the long term for both income and growth.
Less desirable combinations are colored orange. In the upper left corner are Low Yield/Slow Growth stocks. Not many investors are interested in stocks with that combination of traits.
4. Know Yourself and Your Objectives, Then Go in That Direction
I like to invest in a business-like fashion. Running my DG portfolios, I am both the CEO and CIO (Chief Investment Officer) of my investing enterprise. Headquarters is my desk upstairs.
My objectives are not the same as everyone else’s. My primary goal – to build a sizable, increasing stream of dividends over time – is about cash flow, not sheer wealth. That alone sets this form of investing apart from what many investors want, which is to “beat the market” and/or “win.”
Given my primary goal, I judge the DGP first by the amount, reliability, and growth of its dividend stream. Total return matters, but it is not the portfolio’s construction principle.
I try to develop an “optimal” income stream, which is not necessarily the largest possible. Optimization considers not only the dividend flow rate, but also its annual growth rate, safety, and reliability.
Some people dread (or even oppose) creating written plans, but for those who are open to it, here is how I think about planning.
My Business Plan for the DGP is here.
5. DG Investing Is a Calm Way to Invest
The behavioral benefits of DG investing are often overlooked. Personally, DG investing caused a significant shift in my investing behavior. For example:
(a) I used to check the market all the time. Now I don’t check nearly as often. I rarely do anything based on daily news, and I am not obsessed over the market’s fluctuations.
(b) I used to follow macro statistics – like the employment rate, Fed activities, and so on – quite a bit. Now I don’t as much.
I don’t even pay much attention to interest rates, despite their unquestionable impacts on stock prices, because after 18 years, I have learned that they don’t much affect my DG investing.
The DGP has thrived through all kinds of interest-rate trends. Here are the Fed’s target rates since the portfolio began:
We see years of low rates (near zero), varying trends of rate increases and decreases, and so on. The DGP has simply carried on through all of them.
(c) I used to worry about sudden, one-day 500-point declines in the market. They were scary. Now that sort of day just seems like short-term noise, nothing to get very worried about.
One reason for my relative indifference to the market is that DG income simply does not fluctuate the way market prices do. The market may drop several percent, or 10% (a correction), or 20% (a bear crash), but the dividends do not follow those price changes. Rather, they go up every year.
Not only that, DG stocks tend to have low price volatility.
“Beta” measures the volatility of a stock, or whole portfolio, compared to the S&P 500. The index is defined as having a beta of 1.00, and other betas are compared to that.
The beta of my public DG Portfolio is 0.55 – meaning it has been 45% less volatile than the S&P 500 over the past five years (per Simply Safe Dividends).
I’m not stupid. Lower volatility works in both directions. While a typical DG portfolio will not often drop as fast or as much as the market, neither will it lead the market up during a rally. Overall, it is generally a smoother ride.
6. You Still Get Total Returns with DG Investing
Sometimes, investors presume that a dividend-centric portfolio will not deliver much in the way of total growth. After all, dividends are paid to shareholders, not retained by the company to invest in its own growth.
But that does not mean the company cannot grow. High-quality DG companies make enough money to do both.
In the chart below, consider how closely Procter & Gamble’s (PG) price growth (orange line) and dividend growth (purple) match over the past 10 years. They are nearly identical, even though there are major short-term differences caused almost entirely by price volatility. (PG is not a volatile stock: Its beta is 0.42.)
But wait, there’s more.
To a DG investor, PG’s growth is not represented by the purple price line. “Growth” includes not only price changes but also dividend dollars received and (during accumulation) the impact of reinvesting those dollars.
That simple act by the investor – reinvesting the dividends – makes a huge difference in his or her investment’s total growth.
Including the dividends and reinvestments increased the PG owners’ price return of 68% to total return of 119% over the past 10 years. The reinvested dividends bought more shares, and those additional shares participated in their own price changes and paid their own dividends.
Bottom line: By paying out dividends, Procter & Gamble has not turned its back on company growth. And the dividend-growth investor does not turn their back on growth either.
I have never added a dime of new money to my Dividend Growth Portfolio since its inception. But, as we saw earlier, its total value has quintupled over that time.
7. Price Declines Always Have a Silver Lining
Yield moves in the opposite direction from stock price. That is inherent in the formula for yield:
Yield = Dividends / Price
Since price is the denominator in that formula, when a stock’s price goes down, its yield goes up.
If you are in buying mode, you can get a stock at a higher yield if you are able to buy it at a lower price. Here’s PG again. This time, the chart shows PG’s price (purple) and yield (orange) over the past 10 years.
The two lines are nearly mirror images of each other. When PG’s price dropped to a low point in 2018, its yield peaked near 3.9%. When its price rose to a high point at the beginning of 2022, its yield cratered to 2.1%.
We know from an earlier chart that PG’s dividend in dollars never cratered – it kept going up. The changes in yield were almost entirely the result of PG’s price changes.
As an investor, you can take advantage of that equation: Buy when the stock’s yield is toward the higher end of its normal range. Your portfolio will deliver both more dividends and better total returns.
I practice what I preach. I do not “drip” my dividends back into the same stock that paid them. Rather, I collect them for a month and then invest the money into a particular stock that I select for that month’s purchase. In selecting, I pay attention to stock yields and prices. I rarely reinvest in a stock whose yield is low compared to its own history.
Simply Safe Dividends makes this easy by showing how a stock’s current yield compares to its 5-year history. Here is PG again, showing that, as far as yield goes, PG is in a favorable buying position as I write this article, yielding 22% more than its average over the past five years..
8. Much of Your Performance Is Under Your Control
For any DG stock, if you can get it when it is low-priced compared to its earnings potential and yielding more than it usually does, you will benefit:
• Higher starting yield = more dividend dollars from the start.
• More shares for the same amount of money. That also contribute to more dividend dollars, because dividends are paid per share.
• Every time the company raises its dividend, you will get more dollars from the percentage increase, because it is being applied to a larger base dollar amount.
• If you are reinvesting the dividends, you will have more dollars to reinvest, every time. That accelerates the compounding of your portfolio’s share count and dividend stream.
• More margin of safety in the price itself, which manifests itself over long periods.
You cannot control the market, but you can control your process.
Learn how to manage your portfolio in ways that tilt the odds in your favor. My primary goal is to build reliable rising income over time. Here is how that happens.
Those three processes happen simultaneously and reinforce each other.
(a) Stocks Increase Dividends
This is under the company’s control. You can’t do anything about it.
But you do select companies that are highly likely to increase their dividends. That’s why you want DG companies with:
• High fundamental quality
• Safe dividends (unlikely to be cut or frozen)
• Proven track records
• Yields that you desire
• Historically good dividend-growth rates for their yields
• Good prices
(b) You Reinvest Dividends
You control this process. If you are in the accumulation phase of life, there is usually no reason not to reinvest all the dividends to optimize your results.
Even in retirement, you may still be able to reinvest some of them.
We earlier saw the impact of reinvesting dividends on Procter & Gamble’s total return, so I will not repeat that verbiage here. You may recall that reinvesting PG’s dividends back into PG would have nearly doubled its total return over the past 10 years.
(c) You Adjust the Portfolio
This refers to trimming a position, redirecting the money, selling out of a position, starting a new position, etc.
In my own portfolio, I do not trade very much, but I strongly consider it when certain selling guidelines kick in. My guidelines include when a stock or fund:
Cuts, freezes, or suspends its dividend
Bubbles or becomes seriously overvalued
Registers performance well short of expectations over an extended time (minimum one year)
Is going to be acquired, spins itself into two companies, or is impacted by significant fundamental changes in its business
Grows to where it is beyond 5% of the portfolio
Over the years, I have sold stocks that stopped meeting my standards, trimmed positions that became too large, and occasionally changed my mind. Doing such things is contemplated in the business plan, because they improve results.
What Has Surprised Me the Most?
• Top of the list: Overall growth. At the beginning, I was focused intently on getting the income part right. The degree of sheer growth has come as a welcome surprise, especially since it was never a primary target.
• Behavioral change. The effect on my investing habits and practices has been immense. I used to watch CNBC every chance I got. Now I rarely tune in, and when I do, it is for entertainment, not for ideas or pundits’ opinions. They almost universally do not have the same goals that I have.
• Lack of realistic treatment of dividends by academic and industry sources. I was and remain surprised by how little dividends are appreciated across the personal finance industry.
• The difference between investment returns and investor returns. As an individual, you really can impact how well you do by first carefully identifying your most important objectives, and then setting up strategies, tactics, and to-do lists to keep heading in your own best direction. Portfolio management decisions add up over time.
• The importance of keeping emotion out of your investment process and decisions to the extent possible. “Risk tolerance,” the industry phrase, hardly begins to measure the importance of emotional control.
• How many different ways there are to design and execute a DGI approach. No two investors that I have met do everything the same way. For that reason, I do not call the DGP a model portfolio – it’s built for me, not for everyone else. The only recommendations I make are about process, not stocks.
• Compounding really is like magic. Growth lines on a chart not only go up and to the right, but they curve up, rising more each year than the year before. Here is the dividends-per-year chart with a trendline added – you can see the curvature:
–Dave Van Knapp