Why dividend stocks are a great place to start your evolution as an investor
My portfolio’s changed quite a bit since I started my march toward a million (journey to make $1,000,000 in dividend income) with a simple $100 deposit into my Robinhood account back on July 15, 2016.
The 0.59% gain since might say otherwise, but I’m damn proud of the $26.15 I’m up so far. Damn proud. Yeah, yeah … hold your applause.
Seriously, though, I’ve invested a little over $4,000 into 45 different companies and, well, I have a plan, which is more than I could say when I started. I’ve learned a lot since my start, too, which is far more significant than any monetary value. I know what you’re thinking: anything would be more significant than the chump change I’ve made so far. But you can’t put a price on knowledge.
That said, here’s what I know: the markets are as unpredictable as a room full of kindergartners. One minute it’s calm and the next its all over the place. All you want is for it to settle down and behave, but, well, no such luck.
There’s good news, though. Unlike with kids, when it comes to the markets you can ignore the noise … or at least turn it down a notch. It’s good to have your finger on the pulse of what’s going on with things, especially the companies you invest in, but you shouldn’t react to every surge or slip in stock price.
At first, back in June, I woke up every morning hoping for gains. Now, though, I just wake up happy I discovered dividend investing in the first place. I don’t care if my investments soar or stumble. I really don’t. Some days they’ll jump, some days they’ll slump and some days they’ll do both … all before lunch. It’s just the nature of the beast. All I care about, and plan on caring about for the foreseeable future, is collecting those dividends. Might not be the right approach, but it’s my approach. By investing in familiar companies, good companies with a solid dividend and even better history of paying it, I feel like I’ll win in the long run.
And you could, too. I truly feel dividend growth investing is the way anyone looking to invest should get started. The best part about it is literally anyone with a little cash to stash can do it. Picking the right investment is key, obviously, but, with all the different rating systems out there, it’ll be just as obvious which companies are keepers and which are better left alone. There are a ton of solid dividend growers out there … you just have to take some time to find them.
There are a bunch of other reasons chasing dividends is awesome, too, one being you don’t have to spend your days babysitting your portfolio. Let’s have a round of applause for free time.
I have a ton of respect for traders, but there’s no way I could break down charts looking for entry points, etc. When I stumble upon people discussing trading on social media, like Stocktwits, I wan’t so badly to be a part of the conversation, but I have literally no clue what they’re talking about. It’s like they’re speaking another language. I’m afraid trading, while lucrative and really, really cool, isn’t my thing. I hold on to what I buy.
Another great thing about dividend investing is it brings at least a taste of predictability to something that is somewhat unpredictable by nature. Companies can cut or even do away with their dividend whenever they want, but many have been paying ever-increasing dividends for decades. Once you find those, and check to make sure the payout ratios aren’t too high, you’re good to go.
If you haven’t noticed, part of my investing strategy is to keep it simple. I try not to overthink things and focusing on the dividends helps me do just that. I remember thinking the numbing number of numbers associated with each ticker was unreal when I started. The info isn’t terribly difficult to sift through once you have some sort of an idea how to do it, but it can still be a bit daunting. I skip through most of it and settle for the abridged version – stuff like P/E and payout ratios, earnings per share and dividend yield.
I’ve seen people praise dividend growth investing and I’ve seen people poo poo it. Either way, I’d recommend it to anyone and, through this blog, I hope to show how anyone can turn it into a life-changing passive income stream.
You can find more about why I love dividend growth investing here. In the meantime, stay tuned.