I will only purchase those companies that have a historical record of raising their dividend each year. I know that a low 2% dividend paying stock is not necessarily bad. It means the company in question is a growth stock, using most of its profits to expand. A growth stock makes up for the lower dividend yield by faster stock appreciation in the marketplace (however, the company will still show a historical record of raising their dividend each year). I will diversify into 3 stocks, right from the get-go, even if it means I start off with as little as 5 shares of each company. I will not pay commission-fees. I will place emphasis on increasing the cash income paid to me from all my stock market retirement investments.
Ed Legzdins, President and CEO, BMO Mutual Funds suggests that, for many investors, a continuous purchase plan "just makes good sense" and he urges investors to talk with an investment professional to get a better understanding of how these plans work. "An investment professional can explain the benefits of investing regularly, and demonstrate how this can help you achieve your goals," he said.
However, I also understand that in the stock market there are no guarantees! It is for this reason and this reason alone, that diversity is a necessity. If I knew for certain that CMA would continue its program of raising their dividend every year, and that the next 14 years would provide better than 15 percent return on my money, I would only own CMA stock. It is because of this ‘risk of no guarantees' in the stock market that the rewards for investing in the stock market are much higher than a passbook savings account, CD's or Bonds.