Dear Violet, Mia, Noelle, Charlie, Henry and George,

Proverbs 13:11 (ESV) “Wealth gained hastily will dwindle, but whoever gathers little by little will increase it.” (GROWTH! – Patiently grow your wealth and income over time. Don’t try to get rich quick.)

Ecclesiastes 11:2 (ESV) “Give a portion to seven, or even to eight, for you know not what disaster may happen on earth.” (DIVERSIFICATION! – Don’t put all your eggs in one basket!)

One of the bigger investments in your Fidelity UTMA account has the ticker abbreviation of DGRO. The “D” is for “dividend” and the “GRO” is for “growth.” When I told you about DVY in a previous letter, I mentioned dividends and diversification (not putting all your eggs in one basket!) This ETF is similar but different. It is similar because it holds dividend-paying companies, but it is different because:

  • There are even more companies in this fund: over 400 companies. DIVERSIFCATION!
  • These companies might best be known for increasing their dividends on a regular basis, usually once every year. This is called dividend growth. You should get increasing dividends over time, and you don’t have to do anything to get the increase! GROWTH!

Here is another way to think about this income: when you put money in a savings account, the bank usually won’t give you more interest every year. They might, if they increase the interest rate, but it isn’t likely. They might also decrease their interest payment.

Companies that pay a dividend and have been doing so for many years are very hesitant to decrease their dividend, because that sends a bad message to their investors. If they have increased their dividend for twenty years, on the 21st year they will usually increase it again.

One of the companies you own inside of DGRO is Johnson & Johnson (JNJ.) JNJ has been increasing their dividends every year for 55 years! JNJ makes products for babies, beauty products, health products, healing products, medical devices for surgeries and pharmaceutical drugs to treat diseases and fight cancers. You probably have JNJ products in your home. We do too. As they make more products and sell them, they get more income. As they grow, they can grow the dividend. You do nothing. You get a pay raise just by being patient. The graph shows the last couple of years of annual increases.

Your great grandma Boyles owns shares of DGRO and I do too. This is a good investment that provides diversification and growth.  Your investment in DGRO is currently worth more than $800. Watch for it to grow!

Love, Grandpa Winquist

https://www.ishares.com/us/products/264623/ishares-core-dividend-growth-etf

Here is another word picture:

Your Grandma Cindie is a gardener. She likes to see plants grow. As they grow they produce flowers and usually there are more-and-more flowers every year. She doesn’t have to do anything – well, she does have to weed and water. A little care produces more every year.

 

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