Growth of Capital or Income?

[cannew]

Which do you consider most important? It's not a trick question where you say both, pick one or the other because that will define your investment strategy.

I'm clearly Income.

[fiveoh]

Income. That being said I do NOT ignore the capital growth like some do.

[ronn38]

Income

[EricL]

Growth of income is much easier to predict that growth of capital.

Being a young investor, growth of capital is definitely on the agenda, but if I concentrate on the income the capital will follow.

[KenBob]

I am primarily an income investor; however, I do rely upon growth in capital to offset inflation.

[ChadR]

Being a DGI investor, I'm more concerned about growth of income. While my net worth is nice to track, I don't plan on using capital to cover my expenses after I retire. This is also why I don't track my portfolio growth against any index.

[Dan Mac @DGSInvesting]

As a dividend growth investor I'm looking for income that is growing at a rate above inflation. If the companies I own continue to annually increase their dividend payments to shareholders, then they must also be growing the bottom line to support the higher dividend payments. This will naturally lead to a higher market valuation down the road and growth in capital as well. I like the income but enjoy the best of both worlds with dividend growth stocks.

[hendi_alex]

The sum of the two gives total return, which IMO is the most meaningful metric. It doesn't matter whether one generates cash flow from a dividend stream or from selling a few shares to capture appreciation, the net result is the same thing. Dividends however give the benefit of flowing in even during a downturn, when selling shares might be painful. I used to chase yield, but now for the most part, settle for more modest yields, generally in the 4% to 6% range, while trying to focus on companies whose share price might appreciate more than pure income plays, and which may give a more solid total return. Still, my bias is toward dividends, as very few tickers that yield less than 3% will ever make the cut into the portfolio.

[Kerim]

As a committed dividend growth investor still deep in the accumulation phase, my short answer is also "income." But there is more to it than that.

All I really want is enough wealth to live on comfortably for the rest of my life and with luck leave a nice chunk behind for others to enjoy. I think that may be true for many people. But I really don't care if that wealth comes as a growing stream of dividends from a portfolio of DG stocks lovingly collected over the decades or if it comes from a pile of stocks that pay no dividends at all but have appreciated in value a lot or if it comes from pure luck like an inheritance or a lottery ticket, or if it comes from a mix of all three.

I just happen to believe that my best shot at the kind of wealth / lifestyle I want comes from living below my means and steadily building my DG portfolio and its stream of income. I've got no inheritance coming and am not willing to rely on the lottery, and I don't know how to predict which non-dividend stocks are going to grow significantly. I do understand and believe in the dividend growth approach, and so that is what I am doing.

But the DG portfolio, and its increasing stream of income are not my *goals.* They are only a means to meeting my real goal -- financial security. I am not emotionally attached to the approach. I just happen to believe that it is the best alternative before me. And I will stick with it as long as I believe that to be the case. Maybe that takes me happily right through retirement. Maybe not. If my crystal ball ever gets back from the shop and I can see reliably which will be the great growth stocks in the coming decades, I'd switch to capital growth in a second.

But the crystal ball shop seems to be having trouble getting the parts they need. So I will continue to nurture and grow my income stream from DG stocks.