I invest conservatively, which to me means buying only high-quality stocks that pay regular dividends, and holding them basically forever. Buy-and-sell investing for the hot, trendy stock of the moment is out, as is buying on tips from freinds, tv shows, magazines or newspapers.

A good way to get safe growth of your money while having steady income is to buy stocks that have a history of boosting their dividends year after year. Many stocks fit this description; they tend to fall into certain categories such as banking, utility companies, insurance, healthcare and household name consumer goods.

You can read a little more about this strategy at http://dividendgrowth.ca, a Canadian site. Especially this page. Here is what he says about his investing philosophy:

"My retirement plan is very simple. When they are value priced, I buy common stocks of companies which have a good record of increasing dividend payments and hold them for the rising income. Here's an example: We bought our BC Gas (now Terasen and sold to Americans in fall 2005 forcing us to sell our shares: Damn Yankees) in April of 1995 for $6.85. The dividend has grown from .45 to $.84 a share¹. Our yield on those shares is now 12.3% (.84/6.85). The price of Terasen has just quadrupled too. Since the collapse of the stock market in the spring of 2000 alone, Terasen is up over 90%. (In times of market turmoil, investors like dividend-paying stocks.) Dilemma: Do we sell and take the capital gain...only half of it is taxable now... or hold for the increasing dividend? The dividend has been growing at over 5% for the past five years. Regardless of what happens to the price of TER common shares, as long as the dividend holds, we'll get our 12.3% yield. Whether the market goes up or down is now of no concern. Can you think of a better retirement asset? And no MER. And no maintenance or maturity date. I don't understand why people switch to bonds in retirement. Have you ever known a bond to increase its interest rate? I don't buy bonds, or G.I.C.s. I seek to produce consistent returns from safer dividend-paying common stocks rather than risk the chance of stellar ones that might come with go-go stocks."

Books

• For starters, a basic overview book like Stock Investing for Dummies will get you familiar with teminology, how to open a brokerage account, how to buy and sell stocks etc.
• Then, read The Single Best Investment by Lowell Miller, which explains how to go about selecting good dividend paying stocks in detail.
• Another good book would be The Dividend Growth Investment Strategy by Roxann Klugman.

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