How To Invest In Stock Dividends For Passive Income

I am going to show you how to invest in stock dividends for passive income.

Dividend stocks are well-established companies with a track record of distributing earnings back to shareholders.

There are a lot of great companies that are currently trading on the stock exchanges that will incentivize you to invest in their company by offering you a dividend.

Most often, they will pay out that dividend every quarter, every month, or every year. If you are someone who is interested in following a long-term investment strategy, dividend stocks are the way to go.

Keep reading to discover the smart way to invest in stock dividends!

Watch the video below:

(Click here to watch on YouTube)

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Investing in the stock market is a smart move.

There are two ways to make money in the stock market. One way is to invest in shares of a company and hold it. The other way is to invest in dividend-paying stocks. With these types of stocks, you benefit from the appreciation of a company over a period of time. You also benefit from the dividends that a company pays out to you.

As you get older, you want to hold more dividend-paying stocks or bonds. You will need that income for your retirement. When you're younger, you don't need dividends as much because you are still making money from your job or business. In my case, I already have cashflow that I generate from other sources so I don't need the dividends from my investments.

I reinvest the money that I make to buy more shares. This is a great strategy to adopt if you're a long-term investor like myself. Those dividends get paid out, but they are automatically on what is called a drip. This is a dividend reinvestment plan. You can enroll your stock brokerage account in this type of plan.

This means that every time a company pays out a dividend, it automatically buys more shares of that company. When you have more shares, you receive more dividends over time. In turn, these dividends compound to create more wealth for you. However, there is a place for non-dividend paying stocks, especially if you're younger.

Growth companies; like Amazon, Facebook, Tesla, and Google; don't want to stifle their growth by paying out dividends to shareholders. They would much rather reinvest their money back into their business so that they can grow faster and compete with everyone else in their sector.

With dividends, you can either take the money and live on it or reinvest the money.

I am a big believer in dividend reinvestment. This is one of the easiest ways to grow your investment portfolio once you have stopped working and are enjoying retirement. How much money can you make from a dividend investment portfolio? Roughly 3%.

As an example, if you have $100,000 invested in stocks that pay a 3% dividend every year, you would make $3,000 per year. If you had $1 million invested in dividend stocks that pay a 3% dividend every year, that's $30,000 per year. If time is on your side and you start saving now, by the time you're 70 years old, you could become a millionaire.

Watch the video above where I share my computer screen and show you how to invest in dividend-paying stocks!

I go to Yahoo Finance when I want to do research and evaluate different companies. Yahoo Finance is one of the Dividend Aristocrats. The Dividend Aristocrats is a list of companies that have increased their dividends every single year, for at least 25 years. These are stable, blue-chip company stocks, like Johnson & Johnson, Procter & Gamble, Target, and Coca Cola, to name a few.

If you're trying to find individual stocks to invest in, I recommend you check out this list. When it comes to evaluating dividend stocks, pay attention to the following factors:

The Annual Dividend Rate – the total of the dividends payments expected.
Dividend Payout Ratio – the total amount of dividends paid out to shareholders.

When it comes to investing in dividend-paying stocks, you can choose individual companies, like AT&T, Coca Cola, or Pepsi. However, this is still fairly risky, especially if you're a new investor. I don't recommend doing stock picking. Rather, you should have a percentage of your portfolio in ETFs. These are exchange-traded funds that have a certain objective. There are two ETFs that I really like:

If you're a beginner investor, you will need to get a stock brokerage account. I suggest WeBull. This is a commission-free app, meaning that you don't have to pay any fees to buy and sell stocks. They have a great promotion going on right now where you get 3 FREE stocks valued at up to $1,600 by setting up an account with them. Check out the link below to learn more!

INVESTING RESOURCES FOR BEGINNERS:

This is how to invest in stock dividends for passive income.

If you want to become a successful investor, make sure that you have a solid long-term investment strategy. More importantly, get clear on what your investment goals are and what your risk threshold is.

The sooner you start investing, the sooner your investments will compound over a long period of time. If you don't believe me, take it from the world's most successful investor, Warren Buffett, who said, “Investing is laying out money now to get more money back in the future.” No matter how you look at it, investing is a win-win situation.