Unlock the power of dividend investing

I’ve written recently about how investors tend to buy dividend-paying stocks for either income or safety. Because it’s true.

Capital appreciation is often a last thought in the process, if it’s a thought at all. Investors tend to be perfectly happy just as long as the dividend remains reliable with a reasonable yield.

However, I'm back to my typical pulpit today to preach about the added benefits of dividend-paying companies. Wide Moat Research now has around 150,000 followers, and I want to make sure all newcomers start out on the best possible footing.

That means understanding that dividends can be enormously powerful sources of long-term wealth creation – when they’re handled correctly.

This wealth-building effort isn’t about finding the highest yields (although those are nice when they work out). It’s actually a multi-step process that involves:

I added “whenever possible” to that last step because unexpected expenses do come up sometimes that need to be addressed. But this doesn’t mean that last step is optional.

In fact, it’s exceptionally important since it greatly increases the number of dividend-paying shares you own. So the amount of additional income you receive keeps going up as well.

In short, the more you reinvest your dividends, the more you’re going to get.

Admittedly, this practice does require patience. There’s nothing quick about this get-rich “scheme.”

But if you can commit to being a disciplined re-investor of quality companies purchased at undervalued prices? Well, I personally haven’t found a better way of sleeping well at night (SWANing) through whatever the market throws at me…

All the way from here to retirement.

I’m not going to waste time arguing who called compound interest the eighth wonder of the world. Maybe it was Albert Einstein. Maybe it wasn’t.

But whoever did say it was a genius.

There are plenty of studies I can point to for proof of this. But let’s go with Hartford Funds’ study in 2026, for now – the one that showed how dividend reinvestment and compounding accounted for around 85% of the S&P 500’s cumulative total return from 1960 through 2025.

This is measured by the difference between reinvested dividends and price-only wealth. And the numbers are fascinating.

Actually, scratch that. That’s not fascinating. It’s extraordinary.

It means that two investors could have bought the same stocks at the same exact time. But if one didn’t reinvest his dividends, he would have lost out on 6.6x gains!

Now, perhaps he had good reason for that decision. Perhaps there were opportunities to make even more elsewhere.

In which case, fair enough. That’s why you have to evaluate every opportunity as it comes along.

But otherwise, the results clearly show a financially superior path.

This same Hartford study found that, using its decade-by-decade methodology, dividends contributed about 33% of the S&P 500's average total return from 1940 through 2025. And they became even more important when capital appreciation didn’t do much appreciating.

That's why I’m so focused on dividends: because they can add so much to the wealth-creation process.

Dividend investors have traditionally gravitated toward very specific areas of the stock market. Utilities, real estate investment trusts (REITs), fixed-income securities: These asset classes typically offer higher yields.

For instance, the FTSE Nareit All Equity REITs Index was yielding 3.93% at last check. That’s nearly four times the S&P 500’s 1.02%.

That's a meaningful advantage, to say the least. Though it isn’t the only factor that needs to be considered.

In fact, it’s not even in the top four important factors to evaluate. I first want to know whether a company has a:

In other words, I screen for quality first. It’s only after a company checks out in that regard that I move on to evaluate its dividend.

Last but not least, I assess its valuation. Even an excellent business can be a poor investment if it isn’t trading at an attractive price compared to its earnings power, intrinsic value, and growth prospects.

And here at Wide Moat Research, we do our very best to screen out poor investments. We’re always looking for ways to improve our results, which brings me to new details we’re eager to disclose…

I’ve now spent more than three decades of my professional life reading over financial statements and valuation models to identify attractive investments.

Analyzing assets is my full-time job, after all. So I have an automatic edge over most other people who work other full-time jobs that keep them focused elsewhere.

But that’s about to change.

Because Wide Moat Research is almost ready to make that level of information available to individual investors.

This program, Wide Moat Intelligence (WMI), is our new artificial intelligence (AI) driven research platform. It’s specifically designed to evaluate all those aspects I mentioned above – from quality to dividend safety, growth, and valuation – quickly, efficiently, and understandably.

Our members won’t have to spend hours poring over financial websites to sort through analyst estimates, earnings reports, facts and figures, and spreadsheets. They’ll instead have a one-stop shopping experience to answer important questions like:

For those of you who remain AI-hesitant or even AI-resistant, don’t worry. Wide Moat Intelligence isn’t seeking to replace good, old-fashioned investment analysis. We’re still very much about putting in the time and effort to make the wisest, most sustainable stock market decisions possible.

It’s just that we’re making the process much, much more efficient by combining decades of experience and fundamental research with advanced AI technology designed to cover proprietary scoring methodologies, financial dashboards, and powerful screening capabilities.

Wide Moat Intelligence incorporates the same principles I've based my career around: the same focus on quality and value. The same commitment to generating dependable income and then safeguarding it after it’s been acquired.

So, as I keep on saying this last week or so, stay tuned! We'll have much more to share about Wide Moat Intelligence as 2026 comes to a close.

We’re about to turn the page into an exciting new investment chapter. And I, for one, can’t wait to see everything we can accomplish up ahead.

Happy SWAN investing,

Brad Thomas
Editor, Wide Moat Daily