I havent spend much time talking about investments, but this is a shame because investing is what I do with nearly all of my cash. My goal is to keep less than $20,000 in USD at a time. Take a look at Blake’s strategy at maximizing dividends. – Michael
Dividends are returns you get on stock purchased of a company. When a person buys stocks, they basically become a partial owner of the company. Thus, when the company earns profits, the partial owner gets paid part of those profits.
The way stock-holding companies work is one of these two:
Simply put, dividends are the company’s profits, and as dividends are paid per stock, the more the number of stocks owned, the higher the dividends paid. This also implies that the higher the profits earned, the higher are the dividends paid out.
Stock, however, needs to be owned before the ex-dividend date if dividends are to be paid out to the stockholder. This date is set by the stock exchanges and not by the company itself. As a stockholder, you would need to buy your stocks on or before the ex-dividend date to be eligible for dividend payouts.
Carefully invested stocks can lead to a comfortable nest egg that can support a person through their retirement age. To build upon this, there are several ways you can ensure that the payouts will keep coming.
It is pertinent to be careful when investing in stocks. If you choose stocks only for their high payouts, you would run the risk of buying stock from a company that is in trouble. Typically, the dividend payout of a company appears to have increased when it is in trouble because it is compared to the lowered stock value.
A company that is in trouble could lower its dividend payout at any time due to lowered profits, dragging its stock value down with it. If you are not good at screening such stocks, you would be safer sticking to a stock fund that has previously worked for you. You can find our undervalued dividend growth stock screener criteria here.
We’ve covered this Dividend Aristocrat before and we continue to love the prospects of investing in Aflac (Ticker: AFL). Aflac recently went for a 2:1 stock split on their shares. I love investing in stocks post-split as they typically outperform. I don’t know why since stock splits are purely cosmetic. That is not the only reason why I like this Dividend Aristocrat. We also like Aflac for the following reasons:
Medtronic is a medical device company with headquarters in Dublin, Ireland (for tax purposes that was unnecessary now that the tax bill has been implemented). However, Medtronic’s operational headquarters are in Fridley, Minnesota. Medtronic is among the world’s largest medical equipment development companies. Medtronic employs over 85,000 people and has more than 53,000 patents (talk about an economic moat).
We love Medtronic as an investment in a Dividend Aristocrat because the dividend is extremely safe with no signs of a dividend cut. In addition, in light of recent volatility in the stock market, we believe that Medtronic is very sheltered to recessionary conditions. Their products are in high demand and the pipeline looks strong. Medtronic was actually able to increase their earnings per share during the Great Recession. We also like the valuation for Medtronic:
To sum up on dividends as a tool for retirement income, it is important to remember that investing in stocks is always a risky matter. Stock values are never steady in the share market and will sway as the company functions. And therefore will the income vary. We’re always happy to provide you an introduction to credit card manufactured spending. Try it out some time. This will allow you to save some more cash to invest in your dividend portfolio!
But if you stick it out, the dividend income will be worth the perseverance.
Author Bio: Millionaire Mob is a blog focused on things that we truly enjoy: Travel Photography, Travel Rewards, Passive Income, Dividend Growth Investing and Personal Finance advice. I hope to provide the best advice to help you learn and grow along the way. Join the mob of financial freedom experts and escalate your life. Follow us on Twitter @MillionaireMob2 or Instagram @millionaire.mob!