How Dividends will buy my Freedom!

Have you ever searched for a way to make money for doing nothing?  Does that sound too good to be true?  Well it is possible to do and 100% legitimately.  No cheating or cutting down anyone to get ahead.  In this article I am going to attempt to explain why dividend stocks are the best way to invest (especially for young people).  There are a few different ways to make passive income such as bond interest, rental properties, and of course my ultimate favorite DIVIDENDS!

 I believe dividends are the safest and most reliable way because of the proven track record coupled with the interest rates and ultra low yields on bonds.  The housing market may be a great investment as well, but I’m not near that stage where I can afford to drop enough money to participate.  I make a very small income from my job, but am still able to grow dividend income little by little by buying pieces of well run companies, holding onto them through time, and reinvesting dividends into them to build a compounding machine.  So many people I talk to are scared of investing and think it is like gambling.  I would say maybe day traders gamble a little bit, but still have much better chances at favorable outcomes.  I take a little bit of issue with those who advocate 4% withdrawal no matter market conditions.  Who knows how the market will act from year to year?  What if you are selling assets at their all time low during a recession instead of accumulating shares. 

I believe our plan (as well as many bloggers is a much more solid) See here of holding onto the ownership of these quality companies and at the same time being able to cover all expenses and thus live off of the income they throw off to you.  That gives you a safety net to fall back on in case you unexpectedly lose your job or take a pay cut.  The ultimate goal for most of us is to have the option to not work if we so choose not to and as soon as possible.  It will take a little discipline and some work to maintain your portfolio.  It is not exactly easy to do all the research always while working full time and/or going to school full time.  I know this firsthand, but I believe it will be well worth it in the end.  Do you think you need a high degree to figure it out?  I would argue that it may help you since I am going to school as I type this, but I don’t think at all you have to be a scholar.  Just do the research yourself, find what companies you are comfortable with and learn from your mistakes if you lose money on some then move on because you cannot always predict with 100% accuracy and win every single time.  Getting started may be the hardest part and a lot of people I know say don’t have enough cash to start an account.  At the same time I see a lot of those same people find enough money to spend on less productive things.  I am definitely glad I started investing early and very happy I found my primary strategy of dividend investing.  It will allow me to eventually OWN my time and one day give me the freedom to spend the time doing things I enjoy instead of adhering to the strict schedule someone else drafts out for me.

What about you?  Are you a trader or someone who invests for income?

January 2014 Dividend Update

January started off the year with a decent amount of dividend income.  I am posting this update rather late, but have been really busy working 40 hours every week and taking a Statistics class and accelerated online MSOffice class.  I really do appreciate the support of all the dividend bloggers and the dividend updates they post.  Just a few days ago the ARCP and COLE merger closed and my shares were increased in ARCP.  Not too happy about another $20 reorganization fee from the brokerage.  It is a great way to inspire each other to keep on improving our income.  Here is my January dividend update:

December 2013 Dividend Update and 2014 Goals

December has passed and wrapped up the year that was 2013!  What a great run it was for most investors in equities.  It left many high quality dividend stocks priced at high levels.  Time to look forward to 2014 and make some goals.  My goals will be to continue my strategy of finding quality dividend paying stocks and reinvest the dividends to gain an ever increasing stream of income.  When the opportunity arises I may try to chase some options to boost capital to buy more shares of stocks.

My goals for 2014 are to get as many classes I can finish in school and cover the expenses involved without taking on any, or very little debt.  I will target a goal of getting to $2,700 in dividends in 2014.  Ideally I'd like to double my dividends for as many years as I can, but I have to make the goal achievable and hope to be able to underpromise and overdeliver!

Recent Dividend Increases

Boeing raised their dividend today 12/16/13 by 50% from $0.485 to $0.73 per share quarterly.  Additionally approved a $10B stock buyback plan expected over next 2-3 years.  I'm a happy shareholder in BA!

Pfizer raised their quarterly dividend today 12/16/13 by 8.3% to $0.26 from $0.24 per share per share quarterly.  That is their 301st consecutive quarterly dividend.  Not a bad record.

General Electric raised their quarterly dividend 16% from $0.19 per share to $0.22 per share.  Another raise I am happy to receive as a shareowner.

Prospect Capital Corporation continues their fractional dividend raises every month through June 2014.  This company is a BDC that pays monthly dividends of $0.113 a share currently.

Walt Disney Company raised their annual dividend 15% from $0.75 per share to $0.86 per share.  A happy owner in a seperate ESPP account from a few years ago.  I wish I had more shares and at the prices I paid in the past.

AT&T raised their quarterly dividend last Friday 2.2% from $0.45 a share to $0.46 per share.

Mastercard raised the quarterly dividend 83% to $1.10 a share.  Also announced was a 10 for 1 stock split with the quarterly dividend being paid at a rate of $0.11 post split.  Mastercard also approved a buyback of $3.5 Billion worth of Class A common shares.

Archer Daniels Midlan raised their quarterly dividend 26% also today from $0.19 to $0.24 per share.  Citing strong cash flow generation an future earnings power.  They plan on changing the policy of paying out 20-25% of earnings in dividends to targeting 25-30% in the future to more directly let shareholders participate in the success.  ADM also announced the intention to buyback 18 million shares or $725 million at current prices back from shareholders by the end of 2014 to offset dilution.

Sources: Etrade Financial Corporation

Disclosure: Long DIS, PSEC, GE, BA

Dividend Update-November 2013

As we enter the final month of the year I am happy to report my November dividend total.  I thank God I am able to work and be in good health and provide these updates.  The markets have been rising throughout most of the year, but the plan remains intact to acquire income producing assets that one day cover all my expenses.  When this happens I can choose whether I want to work more, less, or not at all.  December has started off with a welcome pullback maybe a bit overdue.  Realty Income, BP, TGT, Prospect, ARCP, and WMT are some names I've been watching.  Although I keep an eye on a large list of companies in my portfolio my interests can change based on the value or discounts I can find.  I hope these updates provide inspiration for others to take control of their own portfolios and be responsible for their own actions instead of relying or blaming others when their returns are not met.  I continue to be inspired by my other fellow bloggers I have listed in my Blogs I follow page.

Dividend Update-October 2013

October has passed and I am glad to report my dividend income for the month. I received some money for owning a portion of the some of the World's top companies. Some of these companies I purchased years ago and some more recently, but all provided me the opportunity to just let the shares sit in my account while they continue to meet their operations and grow their business. In the process of growing the business they decided to reward me as a loyal shareholder. I feel blessed and appreciated to be rewarded with this passive income. I agree with companies decisions to pay out dividends to shareholders, because I would rather have a portion of the earnings then trust a manager to have the opportunity to squander it or reinvest it in ways that for whatever reason don't work out during an uncertain economy. I continue my plan with the structure being to reinvest it back into the businesses that paid the dividend and compound my shares and dividend income month after month and year after year. My October 2013 dividend income was as follows:

Exciting week in the markets so far!

It has been a good few days for me so far this week in the markets.  Yesterday Kimberly Clark rallied big on earnings and followed through today.  Today Boeing smashed the estimates and soared like their famous new plane that has been delayed many times the 787.

Then also this morning ARCP announced a proposed merger with COLE.  I own shares in both companies and they had been fighting over COLE turning down a couple offers from ARCP in the past that resulted in ARCP CEO Nicholas Scorsch calling a COLE executive a liar I recalled reading in the past.  There is a offer on the table and I would have the option to receive a specified amount of cash per share for my COLE shares or 1.0929 shares worth of ARCP for every COLE share owned.  I think I would likely take the shares as with all the ARCP acquisitions and mergers this will make them the World's largest REIT. It would result in an enterprise value of $21.5 Billion Market Cap and the dividend will be raised again to boot.  I can't argue as a shareholder with raises in my monthly dividend income and a stronger portfolio and company for leverage in the REIT industry.  I am considering trying to add to these positions in the future as both plan to continue normal operations and dividend payments until the merger is completed.  I'm still trying to read and learn about the details of this merger, but also looking for attractive income producing securities to welcome to my account.

What about you?  Having a good week with earnings?  Own any ARCP or COLE?