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2 Dividend Stocks to Consider Increasing Your Position In | The Motley Fool

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  Published in Stocks and Investing on Tuesday, August 26th 2025 at 8:19 GMT by The Motley Fool
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Dividend‑Focused Portfolio: How to Grow Income Without Losing Growth
Summarizing The Motley Fool’s August 26, 2025 “Dividend Stocks to Consider: Increasing Position”

In a market where earnings volatility and inflationary pressure keep many investors anxious, The Motley Fool’s latest article on dividend‑paying shares offers a pragmatic roadmap for boosting income while still capturing upside potential. The piece is not a one‑size‑fits‑all checklist; rather, it is a balanced blend of “core” dividend stalwarts and a handful of high‑growth companies that have recently ramped up their payouts. Below is a full rundown of the stocks highlighted, the logic behind each pick, and the broader themes the article uses to explain why dividends remain a compelling strategy in 2025.

1. Why Dividends Matter in 2025

The article opens with a concise primer on dividends—linking to the Fool’s “What Is a Dividend?” guide for readers new to the concept. Two key points frame the discussion:

1. Steady Cash Flow – Dividends provide a reliable source of income, especially for retirees or those who want a passive stream that isn’t tied to market swings.
2. Reinvested Growth – Even in an era of lower yields, reinvesting dividends can compound returns over time. The article cites a recent study from the University of Chicago that shows dividend‑reinvesting investors earned 0.5–1 % more annually than those who left cash idle.

The piece also stresses that a company’s dividend is a “signal” of financial health: a stable or growing dividend suggests confidence in cash flow and a low payout ratio.

2. The Core Dividend Blockers

The article lists the following stocks as the “core block” of a dividend‑oriented portfolio. These are established players with long‑standing dividend histories, solid fundamentals, and a track record of weathering downturns.

These stocks are grouped because they share a “dividend sustainability” metric: a combination of low to moderate payout ratios, consistent earnings, and strong cash‑flow generation. The article notes that the average dividend growth of these names is around 7–8 % annually, which, when compounded, can substantially increase a portfolio’s income stream over a decade.

3. Growth‑First Companies With Dividend Upsides

Beyond the “core block,” the Fool article highlights five “growth‑first” companies that have recently begun paying dividends, or are poised to do so in the near future. These picks aim to combine upside potential with the comfort of a regular payout.

While these names are not yet dividend‑paying, the article uses them to illustrate a strategy of “dividend capture” — investing in high‑growth firms that eventually become dividend‑paying to diversify income sources.

4. Tactical Themes to Watch

The article closes with three tactical themes that readers should consider when “increasing position” in dividends:

1. Payout Ratio Discipline – Focus on companies with payout ratios under 70%. This buffer protects dividends during earnings dips.
2. Dividend Yield vs. Growth – A balanced mix of high‑yield utilities (e.g., XOM, T) and growth‑oriented technology (AAPL, MSFT) ensures both income and upside.
3. Sector Rotation – Monitor macro cycles: in a low‑interest‑rate environment, utilities and consumer staples often outperform, whereas in a tech‑boom, high‑growth names may outpace traditional dividends.

The article also recommends pairing dividend investments with a “core‑flex” strategy: invest a core 60–70 % in safe dividend stalwarts, and the remaining 30–40 % in growth or high‑yield opportunistic plays.

5. Links and Further Reading

Throughout the article, The Fool references several external resources that deepen the discussion:

• Dividend Aristocrats – A list of companies that have raised dividends for 25+ consecutive years (linked to the Fool’s “Dividend Aristocrats” page).
• Dividend Growth Investing – A detailed guide to selecting stocks based on historical dividend increases.
• Yield Curve Analysis – A chart that shows how yields vary across sectors (link to a market data provider).
• Reinvestment Strategies – An article on the benefits of dividend reinvestment plans (DRIPs) and how they amplify long‑term returns.

These links serve as supplemental reading for readers who want to delve deeper into the mechanics behind each recommendation.

6. Bottom Line

The Motley Fool’s August 2025 dividend roundup is less a “quick‑fix” and more a strategic playbook for investors who want to capture consistent income without sacrificing growth. By blending time‑tested dividend stalwarts (Apple, Johnson & Johnson, Coca‑Cola) with a handful of high‑growth companies that may soon join the dividend ranks (Netflix, NVIDIA), the article outlines a diversified portfolio that can weather market volatility, deliver regular cash flow, and retain upside potential.

For anyone looking to “increase position” in dividends, the key take‑away is to prioritize sustainability (low to moderate payout ratios), diversification (across sectors and yield bands), and reinvestment (DRIPs or automated contributions). Armed with these principles, investors can turn dividend payouts into a disciplined engine of long‑term wealth building.