How to make your money go further
When investing for income, it's easy to focus on high yield and lose sight of the other magic ingredient that's required – dividend growth. The real value of a dividend payout which is kept flat every year, is eroded each year by the rising cost of living. With inflation at its current level of 2.1%, a dividend that remains the same for five years would be worth 10.9% less in real terms at the end of that period.
In contrast, a dividend that rises faster than inflation can provide shareholders with a real terms pay rise every year. Although fast-growing dividends often provide a lower initial yield, this disadvantage can be outweighed by gains in future years.
We believe an income portfolio needs a mix of yield and growth to perform well over longer periods. This week we're focusing on a company that's delivered average dividend growth of 16% over the last 10 years. Hikma Pharmaceuticals (HIK) hasn't cut its dividend since…
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