Why Invest In Dividends?

Mey here on another beautiful Monday morning here in Ala Moana Hotel enjoying time working next to my Mom (author of the sci-fi novel Veluli: Amac-1 (Volume 1)) blogging about the important question Why Invest In Dividends?

Do you invest in the stock market?

Do you invest because you are hoping the stock prices will go up and you will sell high?

…or do you just do it because your investment advisor tells you to…

…or do you not have an adviser and had no idea what you are investing in?

…this article is dedicated to you, to give you some good advice on stock investing that actually makes sense for a change…

…it assumes that you are like the average person, who has really no idea what their stock fund is investing in, and just wants to make sure that their money is safe…

…so read until the end and get ready to learn the common sense way of investing – in stocks that make you money in dividends…

What Are Dividends?

…dividends are a portion of a company’s profits that are paid to you as a shareholder in their company…

…when you buy a stock, you are becoming part owner of the company in return for your cash investment…

…when the company is profitable, they can take a share of their profits and pay their shareholders…

…for example, say a company made 100,000 profit this month…

…and they have 50,000 shares…

…they could pay $2.00 per share in a monthly dividend…

…say you own 1,000 shares…

…you would make 1,000 shares x $2.00/share/month = $2,000.00 per month in dividends…

How Do I Make Dividends?

…when you buy shares in a profitable company that  has chosen to pay it’s shareholders dividends…

…some companies are actually pretty profitable and do not pay dividends (at the time of publishing, Google is one of the most notable, and Apple too until recently)…

…some companies pay pretty consistent dividends, and are proud of that and publish it on their website (like IBM)…

…some companies are required by law to pay their profits in dividends like Real Estate Investment Trusts (like Annaly)…

…you want to choose a company that is profitable and consistently pays dividends…

Why Invest In Dividends?

…so if dividends make money, why do people still invest in companies that don’t pay dividends?

…that’s actually a pretty important question…

…if the stock doesn’t pay dividends, then buying it can only be profitable if you can sell it for more than you bought it for…

…people who invest like this are less concerned with dividends…

…this strategy has a lot more risk…

…check out this quote from Daniel Peris to understand why…

“…of the market’s annual total return of 9.7% since 1926, 8.6% of it (which amounts to 89% of the annual figure) came from dividends.” (page 16 of The Strategic Dividend Invester, 2009)

…so if you are investing in stocks that don’t pay dividends, you’re really gambling that a stock’s value will go up…

…and if you think about it, it makes sense, after all, wouldn’t you want to get paid part of the profits of the companies that you have invested in?

…how else are you going to make a profit from your investment?

Conclusion

…this post was inspired partly from my own dividend investing strategy and my intention to create a consistent passive cashflow…

…and also by reading the first Chapter of what one of my investment adviser friends calls the Bible on dividend investing, The Strategic Dividend Investor by Daniel Peris…

…if you are serious about making money in your investing, I suggest you buy this book and read it immediately…

P. S.

…I blog about financial freedom because it’s my goal to help people have their time back…

…so they can spend less time working and more time enjoying their families and friends…

…I am a blogger and I do it for a profit as well, where I pay our family all of our profits…

…interested in making money for yourself, with better odds than gambling on the stock market?

CLICK HERE, enter an e-mail where I can contact you at and watch the free video…

 

A Review Of Passive Income From REIT ARR

…Mey here on Monday morning listening to 6 Figure Shortcuts (which is the best course in building a 6 Figure income online EVER) and blogging about A Review Of Passive Income From REIT ARR

…so, to become financially free you need to have passive income…

…one way that my husband and I make money is that we invest in REITs (click here for an introduction to REITs), and most of our money is in one REIT in particular – ARR…

…to understand more about ARR, go ahead and click here to get an explanation of what a Ticker symbol is and how to research it on free websites

…this REIT pays a monthly dividend of about 16%…

…you might think WOW, that’s great…

…that’s why my husband and I bought so much of it…

…well, the price kept dropping and now the money that we put into it is worth half of what we invested (we kept buying as the price kept falling too)…

…and when the stock price goes down, the amount of money paid in dividends goes down as well…

…then a couple of months ago the stock did a 8 to 1 reverse split, meaning that 8 stocks were combined to make 1 stock…

…so it was about $2.80 per stock and then it became $22.40 per share…

…that’s when my husband and I stopped buying and just watched…

…reason is the stock could still fall in value, and then be reverse split again…

…so, the stock price has been stable since the reverse split, which happened back in August 2015…

…during this time, we still make a lot of money from the dividends from the shares of ARR that we already bought…

…so I decided to review where we were at…

…the fact that the value of our stock has decreased does not concern me as much as the dividend income decreasing…

…the reason we invested in ARR is for passive income…dividends…

…so I calculated the amount of dividends that we have received divided by the amount of money that we have invested and the return has come out to 9% over the last 5 years that I personally have been investing in ARR…

…now that’s still pretty good…

…so it basically went from 16% face value of dividends and became really 9%…

…now, truthfully, past results do not predict the future…

…so I don’t know if ARR is going to go down or up in the future…

…they say what goes up must go down, well it hasn’t gone up in the last 5 years, and it’s just been steady for the last 5 months…

…and I honestly started thinking that it might be a stock that perpetually goes down, and then reverse splits and then goes down again…

…I don’t know…

…I will say this, I’m ok with the money that I have invested in ARR so far…

…afterall, last year my husband and I claimed about $5,000 in passive income…

…which was mostly from ARR…

…and that’s pretty good…

…if we moved to Thailand or Taiwan we would already by free…

…even though it used to be more than double…

…that’s still a lot of passive income for the amount that we invested…

…not sure if I will buy more…

…probably will invest in a more stable ARR like GOOD…

…even though it gives a smaller return of about 8%…

…I hope that gives you a good idea of the risks involved in buying ARR…

…my brother actually told me that the higher the return, the more risky (usually) is the investment…

…let me know what you think of this review in the comments below!

P.S.

…I love blogging about financial freedom and sharing the knowledge that I have gained on saving, investing and mindset about financial freedom…

…I started blogging because I heard it could make you a lot of money as well…

…and eventually that money would become passive income…

…or at least, highly leveraged income…

…I have come to find that there is a system you need in place to make large amounts of money blogging…

…if you are interested in a long term strategy of passive income creation that also lets you express your creativity…

…then CLICK HERE, watch the free video and get started =)

Money Is My Friend – Passive Income Key I Learned From Phil Laut

Mey here on a lovely Thursday, blogging about Money Is My FriendPassive Income Key I Learned From Phil Laut...

…inspired by the book Money Is My Friend by Phil Laut…

…this book was recommended to me by one of my financially free friends Scott…

…I really enjoyed it and had a life changing moment occur when I read the part on passive income…

…when I read the book I was already making dividends with some of my stocks, and was reinvesting them using DRIP…

…and then I read in the book that if you want to be free you have to live off of your passive income…

…that means that you PAY YOURSELF YOUR PASSIVE INCOME every month…

…he had a story in the book where he had a savings account, and it made about $2.00 the first month…

…and he took the money and bought a movie ticket with it and enjoyed a movie…

…the point?

…we need to take our passive income and use it as we earn it, and it doesn’t matter how small it might be…

…this allows our passive income stream to grow and eventually replace our working income…

…if we never take out the dividends and live off of them we will never be free…

…it prevents us from falling into the trap of just saving and saving and working and working our whole lives and keeps us on track for our real goal, which is to make our own money with our own money…

…so right then I started paying myself 90% of my dividends (for all my income, including my passive income, I always pay myself 10% first and put it into my financial freedom account)…

…it’s amazing how just reading that one section in the book changed my life…

…suddenly making passive income streams became A LOT MORE FUN!!!

…and as I’m writing this I’m realizing that I have money in my savings account that is earning interest and I have to pay myself 90% of my interest…

…SCORE!

…so I encourage you to start this key passive income habit, which is start paying yourself your passive income every month…

…you’re going to get a lot more motivated to find ways to earn more and and you’re going to enjoy your money so much more!

What about you?

Do you make passive income in the form of interest, dividends, royalties, etc?

Do you pay yourself your passive income?

Tell us in the comments below!

Weekly Financial Freedom Checklist – Dividends

…Mey here and on a drive to get Bubba Milk tea with my hubby and Jordan I did a quick scope on our Weekly Financial Freedom Checklist…

1) Did you save at least 10% of everything you made?

2) Did you protect your savings and keep it there?

3) Do you know what your Net Worth is?

4) Did your Net Worth increase?

5) Did you take time to think about what you are grateful for?

6) Did you forgive those who hurt you , including yourself?

7) Did you learn something new about Financial Freedom this week?  This week I learned that I need to do more analysis of dividend yielding stocks and REITs to create a more stable stream of passive income…

8) Do you have support for your Financial freedom goal?

…Although you may have seen this checklist before, are you doing it on a regular basis?

…the reason I like doing it weekly is because it reminds me to stay on  track with my Financial Freedom…

…it’s something that we have to do regularly, like working out and eating healthy…

…so, how did you do this week?  

…let us know what you checked off in the comments below!

Lucrative Real Estate Investment Trusts That Will Make You Passive Income

…we look forward every paycheck to invest in REITs or Real Estate Investment Trusts…

…why?

…because they have the biggest dividends, and allow us to invest in Real Estate without the hassle of buying a property, managing it and so on…

…plus, we love the passive income they provide…

…read on for REITs that you might want to dive into yourself…

  1. Annaly Capital – NLY

    …Annaly was the first REIT I ever bought…

    …it makes quarterly dividends at around 11%-12%…

    …the price of shares when I bought was about $16.00/share and now they are much lower at less than $10.00 a share…

    …ever since the first date it paid, I was hooked…to REITs anyways…

    …they create this nice income where I can spend more time relaxing at the beach with the family =)

    …as quoted from E-trade…

    “Annaly Capital Management, Inc., a leading mortgage real estate investment trust…

    …The Company owns a portfolio of real estate related investments including mortgage pass-through certificates, collateralized mortgage obligations, Agency callable debentures, other securities representing interests in or obligations backed by pools of mortgage loans, commercial real estate assets and corporate debt…

    …The Company uses its capital coupled with borrowed funds to invest in real estate related investments, earning the spread between the yield on its assets and the cost of its borrowings…

    …The Company’s principal business objective is to generate net income for distribution to its stockholders from its investments…

    …Under its investment policy, at least 75% of its total assets are comprised of high-quality mortgage-backed securities and short-term investments…

    …Annaly Management Company LLC is the Investment manager of the Company.”

     

     

  2. Armour Residential – ARR

    …this is our favorite…

    …first of all, the dividend yields are always around 14%…

    …and even though the stock price has gone down, it still gives us a steady monthly income…

    …second, it pays monthly…

    …and it’s pretty cheap right now at only $3.00/share…

    …buy some shares and spend more time at the beach!

    …per E-trade…

    …”ARMOUR Residential REIT, Inc. is engaged in investing and managing a portfolio of residential mortgage backed securities (MBS)…

    …The Company’s securities portfolio consists primarily of Agency Securities backed by fixed rate home loans. The Company is externally managed by ARRM…”

     

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  3. Gladstone Commercial Corp Com – GOOD

    …I actually don’t own any of this stock, but it does pay monthly and it’s ticker symbol is GOOD!!!

    …dividends are at 8%…

    ..per E-trade…

    “Gladstone Commercial Corporation is a real estate investment trust (REIT)…

    …The Company is engaged in investing and owning net leased industrial, commercial and retail real property and selectively making long-term industrial and commercial mortgage loans…

    …The Company conducts all of its activities through Gladstone Commercial Limited Partnership (Operating Partnership). The Company controls its Operating Partnership through its ownership of GCLP Business Trust II, which is the general partner of its Operating Partnership, and of GCLP Business Trust I, which holds all of the limited partnership units of its Operating Partnership…

    … The Company’s business is managed by its external adviser, Gladstone Management Corporation. The Company offers administrative services through Gladstone Administration, LLC…

    …The Company generates its investments from the ownership of income-producing real property or, to a much lesser extent, mortgage loans secured by real property…”

     

…when I first learned about REITs my mind was blown…

…I can be the lender instead of the one paying the mortgage!

…if you love this post too then spread it around and share it with your facebook wall, twitter fans, all your peeps…

…let’s make the world a wealthier place!