Field guide
Dividend Yield vs Dividend Growth for FIRE
Dividend investors often face the same tradeoff: take more income now from a higher yield, or accept less current income for stronger growth later.
Higher yield solves current income faster
A higher starting yield reduces the amount of capital needed to produce a target income level today.
The risk is that very high yields can reflect weak fundamentals, payout stress, or slower long-term growth.
Dividend growth improves future income power
Faster dividend growth can turn a modest starting yield into compelling yield on cost over time.
This usually works best when the business has durable earnings growth and a balanced payout ratio.
Most investors need a blend
A retirement portfolio rarely needs to be all high yield or all high growth. A mix can support current income while preserving future increases.
Use scenario tools to compare the same capital across different yield and growth assumptions before committing.