What if I told you the secret of making money passively?
The secret begins with stock investing. In particular income investing. Income investing is one of the simplest, if not the simplest, stock investing strategy in the market. Income investing involves picking stocks based on their dividend rates and yields ceteris paribus. In this post we will not include other investment strategies such as value investing. The post is transcribed in order to provide general knowledge of income investing.
Income Investing Terms to Know:
Dividend: distribution of income to the shareholders of a company
Dividend Yield: total annual dividends / current share price
Dividend Rate: total annual dividend payment
Here is one way to implement income investing:
Start by screening stocks that pay dividends. Then narrow down further by screening stocks based on dividend yields. You don’t necessarily want to choose high yielding stocks because remember the formula for the dividend yield? You divide total dividends by the current share price. A severally low current share price could mislead you into thinking the stock pays a fair dividend given the low share price is due to fundamentals. You also want to analyze the dividend payment history. See how long the company has been paying dividends. See if the company is decreasing or increasing dividends. This will allow you to choose companies that are growing, stable, or even dissolving. A company could be growing if dividend rates have gone up, a company’s industry could be stable if the dividend rates have been constant, or the dividend rates could be decreasing due to fundamental issues. All things considered, this small guide should suffice in order for you to incorporate income investing into your strategy.
Here are some Dividend Paying Stocks
WMT – Walmart
T – AT&T
WM – Waste Management
PMI – Phillip Morris
DOW – Dow Chemical
- I do not like to give direct stock investing tips due to the false nature of the industry. I am not a financial advisor, merely a Junior Finance student attending the University of Texas at Arlington with a knack for picking stocks.
Uhh this is good information if you're looking for safety but this won't grow very well. That mix would be appropriate for a babyboomer about to go into retirement since income & growth generally are on opposite ends of the spectrum.
Here's some real and true facts. Most companies don't pay a dividend and companies that do so, usually do this in order to attract new investors and prop their share price up.
You are NEVER guaranteed a dividend even from a company that regularly pays them.
Furthermore companies that do pay dividends are generally underperforming companies and thus their price is flat or declining in the long run.
If you want to really supercharge your retirement portfolio, use the 80/20 rule and find a mix that works well for you.
Generally Warren Buffet's "golden rule" of investing holds true through out all times in the history of the financial markets.
Before you invest large amounts in a company for long term gain go to your grocery store and see if their products are sitting on the shelves there.
If you do that, then you will own companies that are producing products people buy every day. These are your 80% If they pay dividends that's even better.
For the remaining 20% you should find stocks that are subject to cyclical fluctuations and try to buy on the dips and sell on the rises (same with cryptos by the way). Usually this is quarterly, don't try to become a daytrader.
However you should take 10% and put it in things that are high risk (if you're genx or millenial, i.e. don't do this if your hair has already turned grey or fallen out).
Things such as cryptos, and high yield bonds. There are many companies out there that are paying 10 to 18% returns on their bonds because banks are skittish to lend. Yes they are considered "junk", but so long as their D&B rating is free and clear of outstanding unpaid liens then they aren't likely to go under any time soon.
As always though, do your own homework, your own research. $1,000 in BTC in 2010 would be $650,000 right now. That's only 6 years time span. No stock can match that sort of performance. Steem is similar but pays interest as well. Might want to look at buying some steem :)
Nice post. I also believe in long term and short term investing. Dividends are a great long term strategy, they can provide stable income and long term wealth.
Check out my first post here: https://steemit.com/stockoptions/@optionwiz/option-wiz-steem-community-member-introduction-post-hi-my-name-is-sean