You’ve probably heard of the rule of 72.  The mathematical formula that shows that a consistent 10% return on your investments will double your portfolio balance every seven years.  Of course a 10% return is in the realm of fantasy in today’s market environment but what about a 7% return?

For a dividend paying stock, a 4% dividend yield isn’t terribly difficult to find.  If you choose to reinvest those dividends and they stay constant or hopefully grow, over time your yearly return from that 4% dividend yield could easily top 7% or more.

Guess how long it will take your money to double at a 7% return?

10 years.

In return for taking less risk and investing in solid companies that generate solid earnings you only increase the number of years it takes to double your money by three years!  Not a bad tradeoff for the vastly greater odds that you’ll actually see your money double when compared to a portfolio filled with pure growth stocks.

What’s more, a good choice in the growth stock world doesn’t guarantee its return forever.  A good dividend paying stock can provide consistent and growing income for over a dozen years while today’s high flying stock sporting double-digit returns will be lucky to maintain that growth for a quarter of that time.

What do you think are better odds?  A 4% dividend yield stock maintaining that dividend payout for the ten years required to double your money at 7% annual return or a growth stock maintaining 10% return for seven years?  Considering how unlikely it is for double digit growth to last more than a single year I’d bet on the dividend stock every time.

So, you don’t have to resign yourself to being left behind growth investors in terms of portfolio value.  Choose a few solid dividend paying stocks with healthy and sustainable dividend yields and play the waiting game.  While growth investors chase and more often than not fail to catch that 10% annual return you can be confident that your 7% annual return will continue to compound over time.

Dividend investing might not be as exciting as chasing the 10% return that will double your portfolio in seven years but it could substantially increase your chances of actually doubling your portfolio value if you’re willing to wait just a couple more years.