Dividends Everything You Need To Know To Make Money From ThemSep 17, 2023
Hello Stoic Investors,
Today I want to talk about passive income.
We all dream of a free life.
With work being optional you can focus on things that really hold value.
Like your partner, family, passion, etc.
But how do you get there?
With passive income.
And dividends are one of my favorite types.
Let’s dive in.
What is a dividend really?
Imagine you're a part-owner of a company.
When that company makes a lot of money, they might decide to share some of that money with you and the
This sharing of money is called a "dividend."
And in most cases, it will be cash based.
While Warren Buffett doesn’t buy companies solely for the dividends, he does appear to favor them.
"We all hope for capital gains, but the only thing we can really count on is the dividend." – W. Buffett
So, if the greatest investor in the world appreciates a good dividend, why shouldn’t you?
But the question remains:
How can I get dividends?
To be eligible for a dividend, you only have to do one thing.
Hold a good stock.
In case you need more details on this, here is a step-by-step plan.
Step 1: Become a Shareholder
First, you need to own something called "shares" of a company. Think of shares like little pieces of a company that you can own. You can buy them through your tax advantaged or brokerage account.
Step 2: Choose Companies that Pay Dividends
Not all companies give out dividends. You want to pick companies that are nice enough to share their profits with their shareholders. Look for these companies when you're thinking of buying shares. You can use screeners like Finviz.com to easily find dividend-paying companies.
Step 3: Wait for the Right Time
Companies don't give out dividends every day. They usually do it four times a year (in the United States). When the time is right, the company will decide how much money to give to each share you own.
Step 4: Enjoy Your Dividends
Yay! The company will send you some money for each share you own. It's like a little reward for being part of the company. You can use this money for things you want or save it for later. But the real smart individuals re-invest them.
It’s important to note, that the dividend is usually 1%-5%.
So, if you hold $100 worth of X stock, you’ll be getting somewhere between $1 and $5 per year.
However, companies tend to raise dividend, giving you even more passive income.
All you need is time.
So, note down these points and start investing today:
1. Dividends are the ultimate source of passive income
2. Most of Warren Buffett’s companies pay a dividend
3. A normal dividend will pay you between 1% and 5%