Dividends aren’t just for Warren Buffett and retirees. Dividends have the power to support your goals of becoming independently wealthy. Here are 3 reasons why. Words: 586
The comments above & below are edited ([ ]) and abridged (…) excerpts from the original article written by Pey Shadzi.
Buy why dividends? You’re too young to be an income investor!
Don’t you know growth stocks are better suited for young people?
1. Dividend paying companies usually have excess monies available
Ironically, when a company dishes out billions of dollars to investors annually in the form of dividends, you might consider they’re making too much money. In other words, their profits are so juicy that they’re free to distribute excess cash to one of their most prized possessions: you, the shareholder. Target (TGT), [for example,] has been paying dividends every single year since 1965 raising their dividend annually for nearly 45 years. Now that’s commitment.
2. Dividend paying companies are usually here to stay
Sure, there are a few exceptions, but for the most part companies with long, sustainable histories of paying dividends [such as] 3M (MMM) [for example]…are more reliable than younger companies… You can think of it this way: who would you trust to show up to work tomorrow? Walter, the 56 year old janitor who hasn’t missed a day in 30 years or Slater, the 22 year old hotshot lawyer who just graduated from an Ivy league and landed a job at the firm? Reliability is often a difficult thing to come by in this day and age.
3. Dividend paying companies often have an excellent risk/reward profile especially when dividends are re-invested
Not a day goes by where I don’t hear someone refer to the last ten years as “the lost decade.” Well excuse me if things didn’t go well for growth investors, but owners of quality, dividend-paying companies, such as Johnson and Johnson (JNJ) actually fared quite well…
Though not necessarily as “sexy” as growth investing, take a look at the world of dividend investing and make sure to keep an open mind. I did, and what can I say but “I’m hooked!”
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I invest in dividend paying stocks in order to generate a sufficient income stream that will meet and exceed my expenses in retirement. “Retirement” to me is the point where my dividend income exceeds my annual expenses by 1.5 times, which means that I no longer have to work for money. In order to get there I am following several simple, but crucial, principles [which I would like to share with you]. Words: 830
Americans spend more time planning their vacations than their retirement and this is the reason why 1 out 7 baby boomers are going bankrupt. With people living longer and spending as much as 30 years in retirement, if you want to maintain a moderate standard of living, it is essential to plan your retirement well in advance to secure your golden years.This article outlines 6 ways to do just that. Words: 665
Constructing a portfolio for the retirement years requires one to focus on portfolio risk or uncertainty while not neglecting return. If the portfolio asset allocation plan is too conservative, the return will not meet lifestyle expectations. Inflation is again on the rise and this needs to be taken into consideration when putting together a retirement oriented portfolio. Below is a combination of index ETFs that project respectable returns while holding down portfolio volatility. Words: 455
Withdrawing from a $1,000,000 nest egg upon retirement using the familiar 4% rule to generate a successful 30-year inflation-adjusted (3% per annum) retirement proved to be totally inadequate as per the retirement withdrawal strategy that I put forth in a previous article (1). In fact, it crashed and burned in year 25 of the 30-year plan! In fact, as I show in this article, it will only succeed if your portfolio outperforms the S&P 500 by 5% every year for 30 straight years – and what is the likelihood of that? Words: 1533