How the best UK dividend stocks can help you get rich and retire early

first_img Our 6 ‘Best Buys Now’ Shares G A Chester | Sunday, 23rd August, 2020 G A Chester has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Heaps of companies have cancelled, cut, or suspended their dividends this year. However, even during these extremely difficult times, many other companies have continued to reward their shareholders with cash distributions. Here, I’ll discuss how to identify the best UK dividend stocks, and exactly why they can help you get rich and retire early.Identifying the best UK dividend stocksBuying shares in a company makes you a part-owner of the business. If the company increases its sales, profits, and dividends over time, the business — and your ‘share’ of it — will become increasingly valuable.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Therefore, in seeking to identify the best UK dividend stocks, it makes sense to begin with the business. Does it have a long history of producing increasing sales and profits, supporting a rising dividend?Such a profile suggests it may be operating in an industry, or sub-segment of an industry, with structural growth drivers. And/or that it has some competitive advantage over its rivals. For example, it may own powerful brands or valuable intellectual property. High margins and a high return on equity relative to peers tend to confirm a competitive advantage.Can you envisage the business maintaining its strong position in the coming years and decades? In other words, can it continue to deliver the same increasing sales and profits, supporting a rising dividend, as it has in the past?Successfully identifying such businesses is to successfully identify the best UK dividend stocks. And investing in them puts you firmly on the road to getting rich and retiring early!Compounding makes the best UK dividend stocks even betterAlbert Einstein understood a thing or two about the world. He once said: “Compound interest is the eighth wonder of the world. He who understands it, earns it… he who doesn’t, pays it.”Dividends compound when you reinvest them — that’s to say, use them to buy more shares in the company. The long-term compounding value of dividends is more powerful than many investors realise.Wealth manager Sanlam offers a good demonstration of dividend compounding, using the example of The Coca-Cola Company. Over the period 1980-2017, if you’d bought $3,500 of shares at the outset, the value of your investment would have grown to $220,000. You’d also have received dividends of about $80,000.If you’d reinvested those dividends, your investment would be worth a staggering $580,000.The eighth wonder of the world, as Einstein put it. Or, as my Motley Fool colleague Harvey Jones wrote in a recent article on his strategy of reinvesting dividends: “They’re the tiny acorns that can grow into mighty oaks.”Get started!Given the miracle of compounding dividends, it’s a good idea to start investing as early as possible. Even relatively small sums can snowball into significant wealth over multiple decades.As such, focusing on the best UK dividend stocks, and regularly reinvesting the dividends, could help you get rich — and retire earlier than you would otherwise be able to do.However, it’s never too late to start investing and benefitting from compounding dividends. Indeed, this year’s market crash could be an opportunity for older investors to make up lost ground. Markets around the world are reeling from the coronavirus pandemic…And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away. Click here to claim your free copy of this special investing report now! I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Simply click below to discover how you can take advantage of this.center_img How the best UK dividend stocks can help you get rich and retire early Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Image source: Getty Images. Enter Your Email Address 5 Stocks For Trying To Build Wealth After 50 See all posts by G A Chesterlast_img

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