Investors tend to obsess over yield in the present tense. What’s the current dividend yield? What’s the distribution rate? How much income will this generate next quarter? These are reasonable questions. They are also incomplete. Yield, when examined only at the moment of purchase, is static. Income investing, when practiced with discipline and patience, is dynamic. The real power does not lie in the initial yield. It lies in what that yield becomes over time. Incremental yield on cost is the concept that reframes income investing from a snapshot into a timeline. It is not about what an asset yields today. It is about how rising payouts compound against your original capital. This approach requires patience, analytical rigor, and an unusual tolerance for slow beginnings. It also offers one of the most durable pathways to long-term income growth. Defining Yield on Cost Yield on cost (YOC) is a simple calculation: Annual income received ÷ Original purchase price. If you buy a...
Cyclical industries are where dividends go to prove themselves. Anyone can pay a dividend when demand is booming, credit is loose, and customers are spending like it’s 2006. The real test comes when: Volumes drop Pricing power evaporates Fixed costs loom And management starts using the phrase “temporary headwinds” Cyclicals don’t just fluctuate. They swing. And when they swing, margins compress. When margins compress, cash flow thins. When cash flow thins, dividends get nervous. So the real question for serious investors isn’t: “Does this company pay a dividend?” It’s: “Can this company maintain margins when the cycle turns?” Because margin stability is the foundation. Dividend resilience is the outcome. Understanding Cyclical Industries Let’s define the terrain. Cyclical industries are those whose revenues and profits move meaningfully with economic cycles. Think: Autos Industrial machinery Basic materials Semiconductors Airlines Homebui...