Dividend growth as a risk choice
Dividend investing is often framed as a tradeoff: take income and give up growth. David Bahnsen argues that’s the wrong way to look at it. A dividend is one route to total return, and a company that can fund growing payouts from free cash flow may offer a different risk profile from a business spending heavily to chase future growth. That argument deserves attention, though it doesn’t make dividend stocks a sure thing.
Bahnsen is founder, managing partner, and chief investment officer of The Bahnsen Group, a national private wealth management firm. His book, Profit from the Profit: The Past, Present, and Future of Dividend Growth Investing, examines the strategy. In this episode of At The Money, he discusses what dividends can reveal about a company, how to distinguish dividend growth from a tempting but fragile yield, and what investors should weigh when markets and interest rates shift.
Listen to At The Money: Can Dividend Investing Give You Yield AND Growth? (October 21, 2026).
About David Bahnsen
Bahnsen is the founder, managing partner, and chief investment officer of The Bahnsen Group. His book, Profit from the Profit: The Past, Present, and Future of Dividend Growth Investing, sets out his case for dividend growth investing.
More information: personal bio, professional website, and LinkedIn.
Find previous At the Money episodes here, or listen through the Masters in Business feed on Apple Podcasts, YouTube, Spotify, and Bloomberg. The full playlist of songs used on At the Money is on Spotify.
Transcript
At The Money: Dividend Growth Investing with David Bahnsen
Part 2 — Bloomberg Radio
Bahnsen is founder, managing partner, and chief investment officer of The Bahnsen Group, a national private wealth management firm. His book is Profit from the Profit: The Past, Present, and Future of Dividend Growth Investing.
Why dividend growth beats dividend timing
David Bahnsen’s central point is that investors can’t manufacture value by trying to time a dividend payment. Short-term traders may trade around expected payouts, but the lasting return comes from owning a business that grows. Markets and trading algorithms can price in a dividend before it arrives; the payment date itself doesn’t change the company’s underlying economics. You’re buying the business, not the calendar. That distinction matters because plenty of investors who don’t describe themselves as traders still rely on other people’s expectations. Buying the market or Nvidia because you think someone else will bid it higher is a bet on what other investors will do. Bahnsen argues that dividend growth investing puts more weight on whether companies can increase earnings and returns to shareholders over time. The appeal is less about escaping market prices than keeping attention on business performance instead of every daily move. The compounding can become striking over long periods. Bahnsen cites McDonald’s as having produced a 400,000% return with dividends reinvested, and Simon Property Group as an investor standout despite two drawdowns of roughly 60%, during the financial crisis and COVID. He says longtime holders of companies such as Procter & Gamble, Johnson & Johnson, Coca-Cola and Exxon can eventually receive annual dividends equal to 50% or even 100% of their original purchase price. His Blackstone holding, bought in 2011, now yields about 30% a year on his original cost. Those figures illustrate the math of compounding; they don’t guarantee the same outcome for a new investor.Rules for building and selling
Bahnsen’s portfolio approach aims for diversification with meaningful positions. He says he generally holds 30 to 35 companies, with initial weights around 1.5% to 4%. In his view, 30 holdings can provide adequate diversification without diluting conviction across 70 or 80 names. He also argues that fewer than 80 companies in the S&P 500 now meet his standard of growing their dividends. His screening combines financial measures—cash flow, leverage and earnings growth—with judgment about whether a business model can withstand competition and whether management has a lasting commitment to dividend growth. The dividend alone isn’t enough; a high yield can reflect a falling share price or a deteriorating business. Selling, in his account, has two distinct rationales. One is a broken or weakened investment case: he says he sold Citigroup before its dividend cut and exited BP during the oil spill, when he judged the political and regulatory risks too high. The other is opportunity cost. He says his firm sold Walmart, Apollo and Broadcom after strong gains, shifting capital from positions yielding about 1% into alternatives yielding 3% or 4%. That discipline makes the strategy an active process, even when its horizon is long. For investors considering the approach, the takeaway is measured: dividend growth may offer income and a way to participate in long-term business growth, but it still demands diversification, financial scrutiny and clear sell rules. As Barry Ritholtz summarizes, the portfolio may broadly keep pace with the market and fare better in downturns, though investors need to watch for yield traps. The discussion doesn’t establish that dividend growth will outperform in every market cycle; it lays out a framework for pursuing income and compounding without making dividend timing the thesis. Barry Ritholtz hosts Bloomberg’s *At The Money*.Find the full At the Money music playlist on Spotify.
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