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Is Dividend Investing In Dividend Stocks The Smartest Way To Invest In The Stock Market?

well good news subscribers and a welcome

in today we're gonna have a bit of a

high-level discussion around dividend

investing and if investing in dividend

stocks is actually the smartest way to

invest in the stock market if it's

smarter than growth investing in value

investing I'm gonna kind of go through

all the different points here and kind

of talk in depth about dividend

investing why it's smart why you know

sometimes it's not the best decision and

things like that okay now personally let

me just tell you about myself personally

what type of an investor I am in the

stock market I'm looking for like a

combo of growth and value basically

meaning I'm looking for companies that I

believe still have a great opportunity

to grow over the next three five seven

years but also represent some pretty

good value in or don't trade at Pease

you know forward Peas in the 50s or 60s

or 70s or 80s or something like that

like some stocks okay so I'm looking for

kind of that perfect combination of a

company I believe has a lot of growth in

front of it but also represents a good

value okay dividends you know dividends

I'll probably make thousands of dollars

in dividend money just in the course of

2019 but I do not plan to do that at all

that's not any of my goals okay it's

just like like it just happens to be

that sometimes I buy into some stocks

that pay dividends and because those

stocks give me dividends I make dividend

money that I can go ahead and invest

into other stocks okay but it's not

because I go out of my way to say let me

buy all my stocks or some of my stocks

you know strictly for dividend reasons

that's usually be almost very rarely

that's ever the circumstance usually

it's I'm investing this company because

it's undervalued I feel like it has

growth in front of it and if it pays a

dividend great I get to make some

dividend money so hope you guys enjoy

this video today hit the thumbs up if

you do and I hope you guys get a ton of

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linked in the description all right

let's talk about dividend investing here

so first thing to kind of think about is

money that is constantly coming to you

so imagine you want a portfolio of let's

say ten dividend stocks okay every

single stock in your portfolio pays you

dividends okay that basically means

almost every single month or maybe even

every you know every couple weeks you

constantly have money coming into your

portfolio

it would be a small amount of money like

ten or twenty or thirty dollars or

something like that if you have smaller

amounts of money could be a hundred

dollars could be a few hundred dollars

if you have really big positions it

could be thousands of dollars are

constantly coming into your stock market

accounts constantly and that's a pretty

cool thing because think about in the

context of when the stock market has

trouble right when the stock market's

raw for the stock market it's not really

going up or stocks are doing much the

only way you can really make money from

stocks is you know selling it for a

higher price and basically what you paid

with dividends it's not the case at all

you can constantly be making money from

dividends you know constantly paying you

about all these different stocks you

know most stocks pay their dividends

every three months imagine on a

portfolio of ten stocks or so you looks

like you constantly money is coming into

your account if you have something like

Robin Hood where you can place trades

for free even if you get smaller amounts

of money you can go ahead and buy shares

constantly guys so that is a pretty cool

thing and you can go ahead and use that

money that's constantly coming to you in

your accounts to go ahead and buy more

and more dividend stocks so let's

imagine you have an account with you

nominally you know $20,000 in it or

whatever okay and imagine every single

month you get you know a few hundred

bucks into that account you you make in

dividends you constantly can go ahead

and fly that another 200 bucks back into

dividend stocks and buy some more

dividend stocks with another two hundred

and another two hundred and you get to

just completely keep building and

building and building because that money

just keeps funneling in that money just

keeps following it and you just keep

redeploying that into whatever dividend

stocks you feel you know represent the

best value out there and the numbers

compound bigger and bigger and bigger

and bigger over time because as the

positions get bigger and bigger even if

you start with smaller amounts of money

over the course of three years five

years ten years 15 years all of a sudden

those humps and money start to get

really really big because you have made

all this dividend money you constantly

keep plowing that money into more

dividend stocks that's the key not to

like take it out and be like oh I made a

thousand dollars in

dividends this month let me go ahead and

go party with that or something like

that like that you can do that if you

want I'm just saying that's gonna you

know prevent you from building at a much

quicker rate if you you know

consistently get all that dividend money

plot it into more dividend stocks do

that for 5 10 15 20 years your the

amount of money you'll start receiving

in dividends will be ridiculous it will

start to be like tens of thousands of

dollars in a given month hundreds of

thousands of dollars okay in a given

month okay because the numbers just keep

compounding bigger and bigger and bigger

alright no dividend money paid out makes

a company weaker bottom line okay bottom

line here's here's why it makes a

company weaker imagine you have a

company it has a billion dollars in cash

sitting around they pay out five hundred

million dollars of that money to

shareholders in the form of dividends

that company just got 500 million

dollars weaker okay bottom line there's

no like leg like there's no debate

around that that's just facts that

company is now five hundred million

dollars weaker if the company just kept

that money on the balance sheet they

could have that money for a rainy day

they could have had that money to

acquire another company that can

hopefully boost their profits over time

they could use that five hundred million

to you know invest back into their

business to hopefully fight off

competitors or start a new business line

that could hopefully make them even more

money in the future of things like that

right money that's paid out to

shareholders in the form of dividends

the company can't get that money back

the company can't get that money back

they pay out you know ten million

dollars in dividends 100 million dollars

five hundred million a billion it

doesn't matter it's making the company

weaker at the at a point in time and you

just got to understand that there's

nothing wrong with it necessarily you

just got to kind of realize hey they're

paying out money and to the shareholders

in the form of dividends that is making

the company weaker and that's just a

fact okay so you know just something you

got to think about in regards to

dividends okay no it's a good and bad

thing so it's a sign of stability

generally if a company pays out

dividends most companies that pay

dividends are usually pretty stable

corporations they're usually not just

corporations that are some fly-by-night

thing or something like that usually if

a company's paying dividends to the

shareholders and especially if they're

consistently painted why you want to

look at dividend track you know track

history basically and making sure that

we consistently paying these dividends

out but generally speaking it's a sign

of stability in a company which is good

from a long-term investor standpoint you

generally want to invest in companies

that are stable especially if you're a

dividend investor because you're

counting on those payments constantly

coming at you and hopefully those

payments getting bigger over time

however on the flip side okay that also

usually is a sign of a lack of growth

there aren't a lot of dividend stocks

that have big growth okay I'll just be

completely honest with you guys most

companies that pay dividends especially

ones that are very focused on paying out

you know the majority of their money

that they make each year in the form of

dividends whether it be a 50 percent

payout ratio sixty percent seventy

percent something like that most those

companies have a lack of growth okay

most of them are not growing very fast

that they might be growing at a 10

percent clip or something like that or a

5 percent clip or 2 percent clip or some

of them are unfortunately shrinking but

generally speaking with dividend

investing stocks like there's just not

very fast growers so don't expect that

ok dividend stocks do not provide a for

under stock what do I mean by this so a

lot of people think I'm buying you into

a dividend stock that means essentially

the stock is limited on how much it can

go down I could just tell you that's

completely false ok I've seen dividend

stocks fall just as much as a regular

growth stock or value stock or anything

across the board okay I've seen them

fall 30 percent 50 percent 70 percent

doesn't matter cross support I've seen

you know stocks that had a you know 3

percent dividend yield always can go up

to an 8 percent yield not because the

company raised the dividend but simply

because the stock just continue to fall

continue to fall it's actually a you

know a big myth out there that if you

only dividend stock there's gonna be a

floor under that stock that it's not

going to drop to a certain amount

because it's just they pay dividends and

the yield would go up so much people

would buy it I can tell you it's a

hundred percent not true guys because

it's generally for businesses in trouble

their business is falling apart and they

have this big dividend most most

investors start to think about most fund

managers start realizing you know what

they're probably gonna cut that dividend

okay they're probably gonna cut that

dividend all right no dividends are

taxed at about 15% which generally

speaking is a good thing I mean most you

guys if you make dividend money on

dividend stocks most of that dividend

money you're gonna be taxed at 15%

unless you're super rich or something

like that you're gonna be taxed at a 15%

rate so basically meaning you're

generally speaking that's less of a rate

than most folks pay out there I mean

most folks pay between 20 to 30

something percent rate on you know their

income let's say for instance so let's

say you buy a stock today

you make a profit on that stock over the

next six months and then you go ahead

and you sell that stock okay so you hold

the stock for six months well then

you're taxed at whatever tax rate you

pay so if you pay a twenty two percent

tax rate you know this year next year or

whatever you're gonna have to pay twenty

two percent of that money rather than

dividend money you're taxed at 15

percent okay so you definitely have a

you know I guess you can say a tax

advantage of being you know taxed on

dividend income versus you know

short-term gains or something like that

okay however don't expect big gains in a

stock price if you're buying dividend

stocks most these companies you know you

buy into a Proctor and Gamble a Johnson

& Johnson a coca-cola Pepsi or whatever

these other dividends companies you want

to you know buy Abbott Labs something

like that right these type of companies

don't expect the stock price to double

over any quick amount of time okay these

stock prices are gonna be pretty stable

relatively to the market but they're

probably just gonna very slowly move up

over time so don't expect too big gains

in the stock price when you're buying

these dividend payers especially these

ones that are paying out most of their

dividend income you know out to

shareholders because they just don't

have a lot of growth in front of them

and if they don't have a lot of growth

and why your investors gonna flood and

money into them okay so yeah they're

gonna be a little more stable yeah you

can make that dividend income but don't

be counting on making big money from

stock price gains because it's just

normally not gonna happen just look at

the charts on any of the dividend payers

that are you know the big dividend

payers the caterpillars or any of those

type of companies okay look at their

stock charts over the last five ten

years have they gone up more likely yeah

the Johnson Johnson Procter & Gamble

kimberly-clark you know coca-cola Pepsi

McDonald's any of these stocks that are

seen as the you know the great dividend

stocks most of them have increased our

stock price over the last five ten years

but they haven't increased their stock

price nearly as dramatically as some of

the growth names so just something to

keep in mind okay now a dividend can be

cut at any time so just realize that any

time a company can kind of dividend just

something that we kind of realized there

when you're investing these dividend

stocks don't just necessarily count on

them always paying a dividend then cut

at any time and I've seen companies you

know elbrun is a perfect example they

own bath and Bodyworks they own victory

a secret they own the pink brand rate

that company's gotten into some trouble

over the last year or two and they've

had to cut their dividend over I believe

it's over fifty percent now at this

point so you know it's just because the

company is a great company and

they have a lot of things going for them

doesn't mean they can't cut it because

sometimes these companies can get into

some trouble they pay out way too much

of their money just shareholders in the

form of dividends and they're not

focused enough on the business overall

okay no on the flip side most great

companies most of them came most great

companies raised their dividends each

and every year so in most companies

circumstances usually they're gonna

raise that dividend over time okay so if

you look at you know a lot of these Dow

30 stocks you know the McDonald's or you

know like in the coca-cola like we

talked about Pepsi Procter & Gamble

Johnson Johnson you look at a lot of

these big companies right Verizon most

of these you know great companies raise

a dividend each year and most of them

don't cut their dividend for everyone

you know General Electric situation

that's a perfect example of a company

that was a big dividend payer and how to

cut their dividend I think it's a zero

now I'm not a hundred percent sure on

that but I think General Electric pays

either zero dividend or very close to a

zero dividend at this point in time but

for every one of those circumstances out

of the Dow you know there's probably 20

or 30 examples I can give you of a

company that consistently raises their

dividend each and every year okay so

that's a great thing you buy into a

great company most of the time that's

that company's gonna succeed over the

time and you're gonna make more and more

dividend income because they continue to

raise that dividend money which means

you can compound your money even at a

faster rate over a 10 20 year year span

because here's the thing you bought you

let's say you start you know your first

five years you're buying all these

dividend stocks you're getting all this

dividend money paid out to you you're

constantly you know reinvesting that

money compound you get not only that

most of these great dividend companies

you're buying which hopefully you're

buying great ones right they're gonna be

also raising those dividends each year

so not only you're buying more of those

stocks but then you're getting their

dividends raised generally speaking most

years right almost every single year

year in and year out so you're

compounding money starting as you know

at a very very fast clip where also you

can stop even really caring if the stock

price goes up because you're constantly

getting so much dividend money that

you're constantly reapplying to more

dividend stocks which is a phenomenal

thing and then generally most of these

companies are hopefully raising their

dividends each and every year which

means you get to plow even more money

back into these other stocks guys so

it's definitely a phenomenal way of

investing I have nothing

overall to say about dividend investing

as an overall thing obviously it does

have some negatives in terms of it does

make a company a little weaker and you

know generally is it's a sign of a lack

of growth and things like that but

dividend investing is a phenomenal way

for certain people to invest especially

if you want to invest a little safer

it's not really for everybody and I

don't think you should expect that

dividend investing doesn't have any risk

because it absolutely does have risk

companies can have their stock prices go

down you know companies can cut the

dividends things like that it does have

risk but if you're looking for a wave

investing and you actually picking

stocks and maybe investing you know in a

way that you know you don't get hit as

hard as like a growth investor or

something like that right growth

investing you can get hit really hard

dividend investing can be phenomenal and

you could be you can build absolutely

massive amounts of wealth over 5 10 15

20 year span as long as you're staying

focused on this and even if you're

starting with smaller amounts of money

you know a few hundred dollars or a few

thousand dollars so long as you get that

ball rolling and you're constantly

putting a little more money in your

accounts all the time you know once a

month or maybe even a few times a month

depending on your economic situation

then you're constantly using that

dividend money to buy more dividend

stocks you can start the compound money

in a very quick amount of time and you

know 5 10 15 20 years later you look and

you're like I gotta pal and the

dividend payments start to get

ridiculous and you're like remember the

days when I got like a few hundred bucks

or like a thousand bucks in a dividend

yeah now I get fifty thousand dollars a

month and dividend payments like the

numbers that start to get ridiculous

down the road guys and that's another

reason why you want to start as young as

possible you know start you know in your

20s or maybe even before you're 20 you

know especially or at least get the ball

rolling in your 30s if you wait till

you're 6070 years old to get rolling on

this you know times just working against

you at that point in time you're doing

this when you're you know eighteen

twenty-eight

thirty-eight you know times on your side

you wait till you're 58 68 you know 75

like like it's just you're fighting you

know father time at that point in time

guys so hope you enjoyed this hope you

got a ton of value out of it don't

forget to join my private stock market

membership group if you want that's

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it it has a lot of other you know

phenomenal videos that you guys can

learn so much from including how I

actually pick stocks so hope you guys

enjoy this hope to see you in there

for watching have a great day