Dividend investing

Discussion in 'Ask any question!' started by Armand, Oct 1, 2017.

  1. Armand

    Armand New Member

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    Good day folks

    Let's say I want to invest half of my salary every month into dividend paying stocks, so that I can eventually start living off of dividend income. Would it be as simple as to just go out and buy a couple of shares each month as soon as I get my salary?

    If I blindly go each month and pick a random share from say the S&P 500, and just start collecting shares, would such a strategy be safe? Would it move me towards the goal of living off of my new dividend income? What could go wrong?

    And finally do you have a better suggestion?
     
  2. T0rm3nted

    T0rm3nted Moderator
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  3. Armand

    Armand New Member

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    Thanks, for the help.
    From the article, it seems like those stocks will tend to keep their value much better during difficult times.
     
  4. escr0w

    escr0w New Member

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    Funny that this will be my first post here, although I've been a "registered" member for a while. :)

    The approach you suggested is not safe. While the idea of investing in and living off of dividends is absolutely valid, blindly investing in companies will end in tragedy 99% of the time. Do the research, or pay someone to do it for you.
     
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  5. markbinsc

    markbinsc New Member

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    Agree. You should manage a div portfolio as any other. Don’t take your salary to buy over valued stocks.
     
  6. Andrew Mazza

    Andrew Mazza New Member

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    It is important to understad that certain stocks when a dividend of theirs releases, will drop drastically depending on the value of the stock, float, market cap, and most importantly the dividend yield. When stocks that have dividends upwards of 6% pay off, there stock tends to fall the value of the dividend as it is viewed that the stock just payed away that value to its share-holders. However some of these stocks are very beneficial if you are interested in reinvesting dividend. Especially a secure steady stock like GGN (GAMCO Global Gold Ntrl Rsrcs & Incm Trst), which pays a monthly dividend as opposed to the typical and common quarterly payout. The compound dividend on this stock is fenominal. When I originally invested x dollars I was recieving about 150 dollars a month (that would then be reinvested). After 3 years of ownership, I now own double my original investment worth of GGN and I recieve a much larger monthly dividend, about 450 dollars a month.
     
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  7. TomB16

    TomB16 Well-Known Member

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    Selecting random S&P 500 members seems like a losing idea to me but you are demonstrating thought patterns that I have every confidence will lead you to success. Hopefully, we can help you step over a couple of pitfalls.

    If you can't value stocks or you couldn't be bothered to learn, forget about dividend investing and embrace index investing. It's the best you'll do without a lot of good luck.

    Have a look at the Couch Potato strategy and do some searches on "index investing".

    These techniques operate on the theory that GDP is growing, except during periods of deflation, therefore you can connect your savings to GDP by purchasing a broad spectrum of the market. The market is reasonably well tied to GDP but be careful not to assume too direct of a connection.

    If you want to go down the path of value investing, that's a huge discussion. Find a good value stock that pays a strong dividend, set it to DRIP, and pump what savings you can into it over time. You will do extremely well.
     
  8. TomB16

    TomB16 Well-Known Member

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  9. Gray Wolf

    Gray Wolf Well-Known Member

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    Safe is a relative term. All stock strategies carry risk. Your strategy above is sound but does have risk. It is not a "hands off" approach but it does not require daily attention. You should be prepared to at least check on them over the weekend or whenever your time is available. Check any current news that may have come out etc. Quarterly you should look at the quarterly reports of your holdings to insure there are no surprises on their revenue and earnings. The link that @T0rm3nted posted is a very good one. Sure Dividend is a good site and Dividend Aristocrats a great list. They also offer lots of info in carrying out what you want to do. Read over their 8 rules of Dividend Investing. Consider subscribing to one of their newsletters for a year to gain insight into how to manage a portfolio etc. Good luck in your investing journey.
    (I should point out, I am not involved with Sure Dividend in any way and get zero benefit from suggesting them) :D
     
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