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Warren Buffett once said that: “Someone’s sitting in the shade today because someone planted a tree a long time ago.” Good for them, but I don’t want shade – I want passive income.
Fortunately, something similar is true of dividend stocks. Good ones distribute cash to shareholders for years, great ones are able to do it for generations.
Long-term returns
Since 1994, the Diageo (LSE:DGE) share price has gone from £4.60 to £25.35. That’s a 429% increase, but the real story is the income the stock generates for investors.
Over the last 12 months, the company’s paid out 82p per share in dividends. For investors who bought the stock 30 years ago, that’s an annual return of around 18%.
I’d have been too young to buy the stock back in 1994. But I have a two-year-old and I can make investments now that can generate passive income for him in the…
