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📈Dividend Investing for Beginners 2020📈 - How to Get Started

hello and welcome back to the dividend

experiment the channel that can help you

build a portfolio that pays your bills

in today's video I'm going to give you a

short guy that dividend investing for

beginners investing in dividend-paying

companies is a fantastic way to generate

passive income as we've talked about

before and grow your investment

portfolio over the long run or over

substantial periods of time by focusing

on strong solid companies that regularly

increase their dividends a small sum of

money can grow into something

significant due to the power of

compounded gains if you're looking for

the exciting life on the edge

yacht or bus type of investing with high

risks high rewards it may not be for you

but it is perfect for those interested

in retiring early or just want to

supplement net income with a reliable

source of income in this video I will

cover the important things to know

before you start building your dividend

income portfolio so why invest in

dividend-paying companies I've already

covered what dividends are in another

video entitled what is a dividend so if

you are uncertain what they are then

first go and check out that video

dividends are the only way in which you

can actually get money from the profits

of a company you have invested in

without selling your shirt one way to

look at it is that if you are a farmer

with a cow you can get value from the

cow by killing it and selling the meat

and this will give you a lot of money

right now but you don't have the cow

anymore

alternatively you could milk the cow

we'd get as much money as killing the

cow and selling all the different parts

of it if you wait long enough you can

milk it again for more money using this

analogy we see that the dividend

investing is probably not going to get

you super rich super fast instead you

can get rich just slowly

if a company is giving out a dividends

it tends to be bigger and more mature so

they won't skyrocket in value but will

have a stable cash play that will

hopefully continue to pay out for many

years and these dividends will help us

grow our portfolio over time be careful

of the yield you can tell how much money

a company will give its shareholders by

looking at the dividend yield there's a

percentage of the share price they'll

get returned to you if you hold it for

long enough let's take a look at this

example it's Apple stock and as you can

see it has a current yield of 1.4 6% so

if you bought this stock right now

assuming it doesn't change the dividend

you'll receive one point four six

percent every year sometimes new

investors learn this and fall into the

trap of thinking they should just search

for companies that pay the highest

dividends so let's take a look and see

if we can find a high paying dividend

stock okay here we go it's the online

trading platform plus 500 with a massive

dividend yield of almost 30% it seems

like this would be a great investment

you only need to wait just over three

years to get back your original purchase

cost and after that and everything is

essentially free money but looking at

these sky-high yields that has a high

chance of being a trap plus 500 is

actually a good example so let's look at

the share price over the last year as

you can see from the chart there was a

major collapse in share price in early

February a reason for this is that the

European government and lawmakers have

clamped down on highly leveraged trades

which was a big part of +500 business

model when this revenues falling by such

a dramatic degree it's unlikely that

+500 will be able to continue paying a

dividend at this same level it may just

reduce it or may cut it completely avoid

the dividend yield trap and make sure

you do plenty of research before

deciding on your dividend payer

what should I look at when doing

research the more research the better

but here are some metrics you should

probably be checking out at the very

least when deciding to buy dividend

stocks firstly just as we just talks

about the year it's not the most

important thing but it's good to see how

much you can roughly expect if you

invest in the company it's also good to

see if the company regularly increases

the dividend to see how your yield on

cost will grow over time the payout

ratio how much of the profit is being

paid out as dividends in order for a

company to grow it should spend some

money on research and development and

expansion if it's spending too much on

giving out dividends it may not be able

to grow the company in the future if

profits drop then a company with high

payout ratio may not be able to continue

paying the dividend at the same rate in

the future two EPS growth our profits

per share increasing over time you

probably want to invest in the company

that will make more money in the future

rather than one that's losing money p/e

ratio when a company matures it can be

measured with the p/e ratio I made a

video about the p/e ratio so if you're

unsure what it is then definitely check

out that video and total return this is

simply the dividend percentage do you've

gained as well as the capital gains

added on to one good thing about

dividend companies is that they still

have potential to grow on top of paying

out your dividends when do I get paid

the important part of being a dividend

investor is naturally getting paid so

when do we get paid there are five

important dates you need to bear in mind

number one the trade date this is the

date you put in the order to buy the

shed

number two the settlement date this is

the date that shares actually enter your

possession you don't necessarily earn

the stocks the day you paid for them it

can sometimes take some time for the

details and paperwork to settle

number three the ex-dividend date this

is the first day as stock trades without

its dividend if you buy shares before

the ex-dividend date you're entitled to

that dividend payment if you purchase

the shares on or after this date you

won't get paid until the next dividend

cycle number four is the record date

this is the date where the company

decides who gets the dividend or not it

depends on whether you completed the

trade before or after the ex-dividend

date and number five everyone's

favorites the pay date this is when the

dividends get paid out to you in

conclusion this has been a very basic

introduction to dividend investing if

there's anything else you want to know

then please leave a comment below and I

might be able to answer it or even make

a video on it later if you think

dividend investing is the way forward

and then please feel free to follow

along by subscribing thanks for watching

and I hope to see you on the next video

see ya

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