Dividend Stocks for Dummies: The Basics about Dividend Stocks and which to Invest In
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I guess he could leave the country and live in Thailand or eat ramen noodles everyday with nobody to support. Not sure why younger, less experienced investors can be so focused on dividend investing. Maybe because it is so easy and their knowledge is limited? In my view, this is very important when you are a young investor. Steady returns at minimal risk. Growth stocks are high beta, when they fall they fall hard. Its like riding a roller coaster. Give me a McDonalds any day over a Tesla.
Thats really my sweet spot. But I can assure you that chances are practically zero a dividend investor will ever find the next Google, Apple, Tesla, Netflix, Microsoft etc because these stocks never focused on dividends during their growth phase. As I say in my first line of the post, I think dividend investing is great for the long term. We need to compare apples to apples. Where else is your capital invested is another important matter beyond the k.
I will surely consider buying growth stocks than dividend ones. You can and WILL lose money. Investing is a lot of learning by fire. But if you never get up and swing, you will never hit a homerun. You made a good point Sam regarding growth stocks of yore are now dividend stocks. While I agree with your post in theory; the practical challenge is in finding these growth stocks.
How to Invest in Stocks - Stock Investing - TheStreet
For every Tesla there are several growth stocks which would crash and burn. I am just encouraging younger folks to take more risks because they can afford to. Focusing on dividend stocks and bonds in your 20s and 30s is suboptimal. Yes your companies have less of a chance of getting crushed, but the upside is also less as well. I am new to managing my own money and just LOVE your blog!
What do you advise in terms of TIPS since inflation is inevitable with the flow of money in the economy? I love this article about dividend paying companies- makes sense. Keep up the great work and all the research you do! Welcome to my site Chris! Always good to hear from new readers. Make sure to sign up on the top right corner via RSS or E-mail.
TIPS is definitely a great way to hedge against inflation. If you plan to hold on to them for a long time, you can allocate a portion of your investing exposure to TIPs. Do you think there is still more upside there? If I had a chunk of change to put into a potential multi-bagger today would it be a good idea to put it into Tesla? Not sure what you are talking about. Hopefully the FS community here has gone beyond the core fundamental of aggressive savings in order to achieve financial independence. If not, maybe I need to post a reminder to save, just in case.
Again, perfect for risk averse people in later stages of their lives.
I treated my 20s and early 30s as a time for great offense. A go for broke, play to win strategy. Eventually we will all probably lose the desire to take on risk. My strategy is to build the nut with private business and look to convert that to passive income via dividend stocks later in life. There is no greater way to achieve wealth than by private business, they can be bought at lower multiples and there is not a need to have percieved value to realize gains like stocks.
Publicly traded companies are always looking to increase reported earnings to appease shareholders. Great site! Love your last sentence about hiding earnings. So true! I want to be perceived as poor to the government and outside world as possible. Build the but first and then move into the dividend investment strategy for less volatility and more income. Not the other way around. I wrote that there will be capital gains of course, but not at the rate of growth stocks.
Everything is relative and the pace of growth will not be as quick in a bull market. Dividend stocks are great. The question is, which is the next MCD? Sam, I understand the premise and agree your risk curve should be higher when younger, but do you suggest to buy specific targeted mutual funds or to do the research yourself and pick individual stocks? I tried picking stocks a long time ago, but the more I learned about how businesses operate it became increasingly obvious I had no clue what I was doing.
It always amazes me that a so-so public company can trade at 15 times earnings and people will sink a ton of cash into a single stock I understand the whole liquidity aspect …but small profitable good companies can be purchased for 4.
Dividend Stocks For Dummies
Your point about Enron, Tower, Hollywood, etc. Empower ourselves with knowledge. We spend more time trying to save money on goods and services than investing it seems. A dividend growth stock investment strategy attempts to find companies that are already experiencing high growth and are expected to continue to do so into the foreseeable future.
Those are some really helpful charts to visualize your points. Wow Microsoft really leveled off when you look at it like that. I have a good amount of exposure in growth stocks in my k that have been treating me pretty well.
Who knows the future, but more risk more reward and vice versa. Good luck! Sam, I agree with your overall assessment for younger individuals.
Basic Risks of Dividend Investing
First the obvious choice is that they are in completely different sectors and companies. Which is why I agree with your point. Second Telsa could very easily fall back down in the next few weeks just as fast as it went up. Some companies in growth phases grow to fast and end up going bankrupt and getting bought up. The Tesla vs T is just an example. More risk means more reward given such a long investing horizon. Dividend stocks act like something between bonds and stocks. While stock prices fluctuate rapidly, dividends are sticky. Dividend growth has only been negative 7 times since I mostly invest in index funds, like VTI.
My dividend income is more than my expenses, but only because I have earned a lot of money during the past 10 years with my business. Total returns are derived from both capital gains and dividends.
femeresapci.tk Reinvested dividends have actually accounted for a large part of stock market returns, historically. And yes you read that right. Or almost all of the long-term return. You have a quasi-utility up against a start-up electric car company. Speaks to the importance of time periods when comparing stocks.
Not so bad now. Or can they? And that MCD performance is before reinvested dividends. Which is really at the heart of all of this. Good to have you. Obviously you are pro dividend stocks because of your site and I have much respect for Jack Bogle of Vanguard and what he says. I also appreciate your viewpoint. Where do you think your portfolio will be in the next years? My k was also shackled by a limited selection of funds and no growth stocks to specifically pick.
And again, these are just the facts, not predictions which can be molded however way that benefits our argument. I really fear young people are going to get to their target early retirement age and realize their assumptions were way off and regret their decisions along the way. I really do hope you prove me wrong in years and get big portfolio return.