Is it possible to really make a lot of money by share investing over a long period of time?
If you started early around your mid-20s and invested every month similar to socking away money in a bank, you could have a sizeable amount of money by age 65. It all comes down to the rate of return you get and how many instalments you actually make.
Getting a rate like 6.5% annually will keep the compounding growth strong. However, good luck getting 6.5% bank deposit interest these days. Alternatively, the 30-year average gain for the S&P ASX All Ordinaries Index (ASX: ^XAO) is about 7.2% (from 666 in 1984 to 5,432 now), so a long-term investor could have done it through regular share investing and have a big stack of dollar bills now.
On top of that would also come dividend income. You could possibly have an extra 2% – 5% from dividend yield added to your share price gains. That's why Foolish readers seek out good dividend stocks. Your dividend income could be as much as 40% of your total investing returns over the long term.
Here are some good income stocks paying very generous yields.
— Westpac Banking Corporation (ASX: WBC) pays a fully franked 5.2% yield and has a good record for raising dividends.
— Woodside Petroleum Limited (ASX: WPL), the $34 billion oil and gas producer offers a 5.8% yield fully franked.
— Coca-Cola Amatil Ltd (ASX: CCL), the Coca-Cola bottler and distributor in Australia and four nearby countries pays a 5.6% yield partially franked.
— Woolworths Limited (ASX: WOW) has a 3.8% yield fully franked and a long history of raising dividends.
Seriously investing on a regular basis can achieve some serious money. You don't have to shoot the lights out to be financially successful. You just need to invest in quality stocks paying a good dividend yield.
