Note from the Editor: With headlines filled with concerns about tariffs, geopolitical tensions and inflation, it’s easy to lose sight of the bigger picture. But as long-term income investors, it’s crucial that we don’t get swept up in the short-term noise.
With this in mind, today I’m sharing a timely excerpt from a recent portfolio update from Jason Fieber (the full portfolio update can be found over at Jason’s Patreon). In this piece, Jason offers valuable guidance on how to maintain focus on what truly matters for dividend growth investors: the long-term, growing income generated by high-quality dividend stocks.
As we experience heightened volatility in the markets, Jason’s advice on embracing this volatility and staying the course is more relevant than ever. He reminds us that while stock prices fluctuate, our dividend income continues to roll in like clockwork … and even grow. If you’re still in the accumulation phase of your investment journey, these turbulent times present a unique opportunity to buy great businesses at lower valuations.
I hope you find Jason’s perspective as reassuring as I do. As always, our focus remains on helping you build a portfolio of high-quality companies that pay safe, predicable and growing dividends over the long-haul.
Best Regards,
Greg Patrick
It’s a Great Time to Buy High-Quality Companies For Less Than What They’re Worth
My primary focus is always on the underlying passive dividend income that my portfolio produces, which is something my portfolio easily beats the market at. And that specific focus is maintained as part of a general long-term perspective…
I don’t feel smart when stocks are up, nor do I feel dumb when they’re down. Stocks are very volatile over short periods of time. However, dividend income is anything but volatile – a product of businesses being much less volatile than their corresponding stocks. Stock prices are based on flimsy opinions, while dividends are hard facts. Stocks go up and down every day, but dividends don’t. And when dividends do move, they tend to only move in one direction: up.
That lack of volatility within my area of focus allows me to psychologically disregard stock volatility and stay on the long-term path. With dividend growth investing, income is the outcome. Except it isn’t just income; it’s growing income.
With geopolitical headlines (tariffs this, China that, etc.) barraging us nearly every day, volatility is likely to be higher than normal. But that’s okay. Volatility is something to lean into and take advantage of. This is particularly true for younger dividend growth investors who are still actively accumulating shares in wonderful businesses.
As I always say, short-term volatility is a long-term opportunity. If you’re young and still building a portfolio, cheaper prices result in lower valuations, greater long-term total return potential, reduced risk, and more shares for the same nominal investment amount. It’s more equity in a business for the same invested dollar. This serves you in every possible way.
If one were to see the market value of their portfolio drop precipitously in a short period of time, this can be emotionally deflating for those who are unhealthily preoccupied with daily stock prices. However, you should always be mentally locked on the next 10+ years and what those businesses will likely be worth in the future. I don’t ever think about things in terms of short-term stock pricing. I’m always thinking about long-term business value.
I recommend being intentional, thoughtful, and methodical when it comes time to take advantage of volatility. I do this by staying the course and opportunistically deploying capital into my best ideas, slightly increasing my sense of greed when fear takes over (and vice versa). When Mr. Market is in a depressed mood and is in a hurry to sell high-quality securities for less than they’re worth, I’m all too happy to oblige.
Jason Fieber
Editor’s Note: Jason is putting his money where his mouth is. Over the past several weeks, he’s used the volatility to not only start new positions, but to also add to several positions that he’s still in the process of building for his personal portfolio. To get the full details on his latest purchases — as well as see his entire stock portfolio — you can sign up for Jason’s Patreon here.
