I was never comfortable with investing in the stock market. It always felt like gambling to me because I could not understand what caused a stock to go up or down. I was a fan of passbook savings accounts when I was a kid though. And while it wasn’t explained to me then, putting money into a passbook savings account was a form of investing. I say was because passbook savings accounts no longer exist. They’re just called savings accounts now. I want to push the notion that slow and steady is a strategy. A good strategy that can pay literal dividends that compound over your lifetime. If I knew at 25 what I know today I could have easily amassed a giant nest egg with little effort and stress.

The passbook savings appealed to me as a kid because I knew principal preservation mattered most to me. Before I knew what a stock index was, I knew that I liked stability and steady growth over rapid explosive growth that came with the risk of losing some or all of my money. I also like simplicity. My nearly-60-year-old self could coach my 25-year-old self and point to the power of compound dividend investing that would create wealth as I worked at a normal job. If I could hand my 25-year-old self one afternoon of research, this is the portfolio I’d tell him to build with his first $10,000.

Ignore the Boom of the Moment

Every so often the “market” pushes the latest and greatest high flying stock or sector. Tech stocks in the late 1990s, housing in the mid-2000s, crypto in 2021, artificial intelligence today. The financial media revs things up to a fever pitch trying to convince a new generation of investors that they’re missing everything.

I learned to never chase those stories. Instead, very late in life, I learned that a business that pays me a growing dividend from recurring cash flow doesn’t need a media frenzy to justify its price. The companies below have raised their dividends through recessions, rate hikes, and every other excuse the market invents to panic.

How I Screened the List

I focused on current yield, five-year dividend growth rate, dividend growth streak, and payout ratio. I combined yield and growth into a single score, since a stock yielding 3% and growing its dividend at 15% a year will out-earn a stock yielding 5% and growing at 2% within a decade. This is the same logic behind what dividend growth investors call the Chowder Rule, and it rewards businesses that are still expanding their payouts.

I ruled out anything that cut its dividend during a past recession. A 25-year-old has decades to compound, and that could mean living through at least two or three real downturns. A company that protects its payout when its own business is under pressure says more about its management than any earnings call does. I also capped each sector at two positions because sector diversification is important over the long haul. When one sector of the economy tanks, the others often don’t tank as hard.

The Ten

Ticker	Company	Sector	Yield	5-Yr Div Growth	Growth Streak	Payout Ratio
CNQ	Canadian Natural Resources	Energy	3.62%	22.6%	24 yrs	47%
NVO	Novo Nordisk	Healthcare	4.00%	20.8%	29 yrs	49%
REXR	Rexford Industrial Realty	Real Estate	4.86%	14.9%	12 yrs	85%
ACN	Accenture	Information Technology	3.81%	13.7%	20 yrs	48%
PAYX	Paychex	Industrials	4.01%	11.9%	15 yrs	80%
WSO	Watsco	Industrials	4.25%	11.1%	12 yrs	107%
DOX	Amdocs	Information Technology	3.96%	10.2%	13 yrs	30%
MAA	Mid-America Apartment Communities	Real Estate	4.64%	8.7%	15 yrs	82%
TROW	T. Rowe Price	Financials	4.68%	7.1%	39 yrs	50%
PEP	PepsiCo	Consumer Staples	4.28%	6.9%	53 yrs	69%

Equal-weighted, this group starts around a 4.2% blended yield with an average five-year dividend growth rate near 13%. The yield gives the account income from day one, and the growth rate means that income roughly doubles every five to six years even without a single new dollar contributed.

Watsco, which distributes HVAC equipment along with parts and supplies, has a payout ratio above 100%, which is something to watch. It’s worth checking Watsco’s next few quarters before assuming that pace continues. Novo Nordisk’s growth has been extraordinary, but its business depends on a narrow set of diabetes and obesity drugs, and competition in that category has intensified. Canadian Natural Resources pays a foreign dividend, and its oil and gas business is more cyclical, so its income stream may bounce around more than the others on this list even as the long-term growth trend stays intact.

Putting the $10,000 to Work

Ten positions from a $10,000 starting balance works out to roughly $1,000 per stock, evenly split. I’d buy all ten in the first month, since waiting for a better entry point on any single name won’t matter over a thirty- or forty-year holding period. From there, monthly or annual contributions get split across the same ten positions, weighted toward whichever ones have drifted below their target share of the portfolio.

While I’m young, dividends get reinvested automatically. That does more for a young portfolio than any amount of stock picking, because every reinvested dividend buys more shares, and more shares generate more dividends the next time around. By the time a dividend growth investor reaches my age, the account is producing real income because decades of contributions and reinvestment did the compounding for him.

What I’d Tell Him

Don’t measure the account against the overall market’s return in any year. Measure it against his personal yield targets and whether or not the income and growth are outpacing inflation. The financial media will foment FOMO because it generates ad dollars for them. A patient investor who plans it right ends up with businesses paying him to own them, growing what they pay him every year.

This post reflects one investor’s approach to portfolio construction and isn’t personalized investment advice. Dividend yields, payout ratios, and growth rates change over time, and every reader should run their own research before buying anything mentioned here.