Buy and hold is not the same as buy and ignore

By Ryan Wimalasena · 16 August 2026 · 6 min read

Every dividend blog eventually runs some version of "5 reasons to love dividend growth investing," usually beside a chart of the market's long-run compound return, as if reciting the number hard enough will make you feel calm about your portfolio. The reasons underneath are good ones. They do not need the chart, and they come with a catch most versions leave out.

Dividends did most of the heavy lifting, especially when prices did not

Anyone who started investing in the last fifteen years has mostly known a market where the story is share price. Go back through the decades where prices went sideways for years, the 1970s, the 2000s, and dividends carried a large share of whatever total return investors actually got. Hartford Funds has published this breakdown for years and the pattern holds every time they update it: when price appreciation stalls, dividend income is what is left standing.

Australians have arguably leaned on this even harder than Americans, whether they noticed or not. The local market runs at a structurally higher average yield than the US, partly because franking rewards companies for paying rather than hoarding. A lot of the "the ASX has been a boring market for fifteen years" complaint disappears once the dividends get added back in.

A rising dividend is a discipline test management keeps passing

It sounds backwards. A company committing a growing share of its profit to shareholders every year should have less room to invest, not more discipline about how it does. In practice the opposite tends to happen. Once a management team has trained the market to expect a bigger cheque every year, it is harder to quietly blow the balance sheet on an overpriced acquisition without someone noticing. The dividend acts like a leash on the empire-building instinct that wrecks a lot of otherwise good businesses.

Procter & Gamble and Coca-Cola have raised their payouts for well over sixty years each, through wars, oil shocks and multiple recessions, because that discipline became part of how the business runs. Australia has its own version most US-focused content never mentions: Washington H. Soul Pattinson has grown its dividend for over two decades straight, through the GFC and everything since, running a genuinely boring diversified holding company the whole time. Boring, here, is the entire point.

It keeps you from becoming your own biggest risk

The single biggest threat to most people's long-term returns is not a bad stock. It is loss aversion, the well-documented tendency to feel a loss roughly twice as intensely as an equivalent gain, which is why people pile into a rising market after most of the gains are already made and bail out near the bottom of a falling one. Missing even a handful of the market's best trading days, which tend to cluster right around the worst ones, does outsized damage to a portfolio's long-term return. Staying invested and simply not checking the price every day is a genuinely effective strategy, not a lazy one.

A company like Colgate-Palmolive does not stop making toothpaste because a central bank moved rates a quarter point, and a portfolio built around businesses like it does not need to behave as if it did.

Buy and hold is not the same as buy and ignore

Here is where the standard version of this advice quietly goes wrong. "Ignore the daily price" is genuinely good advice. Somewhere along the way it gets stretched into "stop paying attention to the company altogether," and that is a different claim, and a much riskier one. The price is noise. Whether the dividend growth thesis you actually bought the stock for is still intact, whether the payout ratio, coverage and tenant or customer base still look the way they did, is not noise. That is the one thing worth still knowing, and it is exactly the part that gets buried in a results pack nobody has time to read every quarter for forty companies. If you want the arithmetic behind what a dividend income plan is actually worth, and how franking changes it, that is its own piece.

You can do the boring, correct thing, hold quality dividend growers and ignore the daily noise, without also going blind to the one kind of news that should actually change your mind.

Dividend Guardian provides information and estimates from public data, not personal financial advice, and nothing here is personal tax or retirement advice. Guardian reports confirmed changes; it does not predict them. Company examples above are drawn from public record and included for illustration only.