- What's going on you guys? So in this video today, I'm gonna give you a step by step guide for complete beginners looking to get started
with dividend investing. It's gonna be a pretty
comprehensive video, and we're gonna cover pretty much everything
you would need to know, as a beginner looking to
invest in dividend stocks. I got myself a fresh seltzer,
we're gonna crack this open, and we're gonna get right into it. So first of all, let me tell you what we're gonna be covering in this video because I am not here to waste your time, I wanna make sure you're in the right spot and you're gonna learn what
it is that you're looking for. So we're gonna cover
what is a dividend stock versus a growth stock because a lot of people aren't really
sure of the differences. We're gonna get into that. We're gonna talk about how I
actually pick dividend stocks and what screening tools I
use and kind of how I decide, what dividend stocks
to put in my portfolio. We're gonna talk about
investing in dividend stocks versus high yield dividend ETFs. And the pros and cons of
both of those strategies. We're also gonna cover
what I view as the best dividend stocks for 2021, as well as the best high
yield dividend ETFs. We're gonna cover the best brokerages to purchase dividend stocks,
and I'll actually show you how I purchase them. And I'm also gonna show you my $170,000 dividend stock portfolio. And I'll show you how much
I'm actually making from this in passive income on a annual basis. And then we're also gonna cover some of the key dividend
investing mistakes, just to make sure that
you're not going to be making those mistakes yourself. Now, that being said, this video is for those of you out there who are looking to earn passive income. But it's not a get-rich-quick
scheme or anything like that. This is long term growth of your money. You're not gonna get rich
overnight with dividend stocks but it's a way that people
have been able to earn passive income for hundreds of years, people have been doing dividend stocks. So it's nothing new, nothing fancy. But it's a time tested
way to build your wealth. This video is also for those
of you who are looking to buy your first few dividend stocks
if you're completely new. It's also for passive investors. If you're looking to learn
about investing through ETFs, we're gonna cover that. And honestly anyone who's
just planning for the future and you don't wanna be broke, that's pretty much what this video is. Now, that being said, guys, I do wanna ask you for three
really quick favors here, okay? Number one, I want you to
put your phone on silence unless you're watching this on your phone. If you're not and you're
watching on your computer, look, just commit to sitting
here with me for a little bit and I promise you, I'm gonna teach you everything you need to know. I'm not here to sell you a
course, I'm not selling anything, and I'm not gonna scam you
here with bad information. I'm gonna teach you everything I know about dividend investing. If you need to pause the
video now, go grab a drink. I got my seltzer sitting right here, so we're already in business but, go grab yourself a
seltzer if you need one. Get a pad or paper and a pen and be ready to take some notes here. Lastly, I got a couple of
quick disclaimers to make here. I am not a financial advisor. This is not financial advice, you should always do your own
research before investing. And also guys, I've been getting a lot of scam comments down below. It's a massive problem on YouTube. Last week, I actually had somebody who was scammed out of money by a scammer in my comment section. So I'm gonna start mentioning
this in all of my videos. I apologize to waste your time but, there's a lot of scammers out there, guys, who are basically responding
to comments down below pretending to be me. And I just want you to know that I would never ever
reach out to you directly over the phone or through email, asking you to like send me money or do anything with Forex or Bitcoin. So if you see these scam comments, please just thumbs them down
or comment that it's a scam so other people can see. But just understand that is not me and I don't want anyone else
out there to get scammed. So please do what you can to
make other people aware that this is in fact a scam. That being said, guys,
let's jump right into it with the first topic here, which is what exactly is a dividend? Well, essentially, when a
company becomes profitable, they have a couple of different options that they can follow. The first option is to
reinvest your profits back into your business, because ultimately what
you're looking to do is grow your business and
have it become more valuable, and this is what a lot of companies do. So like Amazon, for example,
they make a lot of revenue, because they're a massive company, but they actually take
a lot of that profit and reinvest it back into the company. So they're not one that's really
you know, paying dividends or sharing profits with investors. Instead, they're reinvesting it and over time that share
price grows instead, and that is what we call a growth stock. But there does come a point for companies where there's no real easy
way to reinvest that money for them to become a larger
and larger company because, you reach a point where you
achieve market saturation and you don't really have a
good way to invest that money back into the business. So for example, AT&T is
one of these companies that has become so large that
they can't really grow much or even grow at all right now, because they're so big
and well established. They make a lot of money,
they make a lot of revenue, and they have high profits, but they can't really grow the company because they become so large. So instead, what they do
is they take those profits and they share some of
it with the shareholders in the form of dividend payments. So that is essentially the
difference between a company in growth mode versus income mode, but we're gonna cover more on that later. So in a nutshell, dividends are a way that large,
well established companies share a portion of their
earnings and profits with the shareholders. It also gives investors
a reason to stick around, because if you have an investment and you don't have a direct
means of making money from it, where the share price
is going up in value, if it was just sitting there flat, you would probably sell that stock. But if you're able to consistently
earn dividends from it, a lot of people will hang on to that stock because it's a means of deriving income from your investments. Now, let me cover a couple of quick misconceptions here about dividends. First of all, there's
no requirement out there that says that companies
have to pay dividends. Some companies decide to pay them as a means of keeping shareholders around and rewarding them, but
other companies decide to not pay dividends. So for example, Berkshire Hathaway is Warren Buffet's company where he does his own
investments in other companies. It's called a holdings company. And essentially, Warren Buffett invests that money in other companies, and he does not pay dividends
through Berkshire Hathaway. That is because he believes
the best way to return money for investors is
to reinvest those profits back into the business
back into other companies and make money through the
share price going up in value, not through paying dividends. So some companies pay dividends, others may never pay dividends, it's ultimately up to that company to decide whether or not they
wanna actually pay dividends. Now as far as how often you should expect your dividend payments, well, most companies out there
are paying dividends on a quarterly basis. However, you do come across
some oddball companies once in a while that pay annual dividends or dividends twice a year, or even there are some monthly
dividend paying stocks. So most of the time,
it's four times per year, once per quarter, but you might find some
odd balls in there as well. Now, when you earn your dividends, typically they're gonna be deposited right into your brokerage
account into your cash balance. However, maybe you're somebody who has an older brokerage account, and you might be getting
mailed random checks. So if you own a stock
like IBM, for example, and you get like a
random check in the mail for a couple of dollars, that's
probably a dividend check. So it might be getting mailed to you. But in most cases, that dividend
is actually being deposited towards the cash balance
in your brokerage account. And you basically have two choices there, you can reinvest that dividend
back into the issuing stock or into your portfolio as a whole, or you can take that dividend
and spend it on your expenses. Now, if you're looking
to maximize your returns as an investor, the best strategy is to
reinvest those dividends because that means the dividends you earn are able to earn more
dividends in the future. But some people actually live
off of their dividend income. And they simply take those dividends, and they put them in
their checking account, and they use it to pay for their mortgage and their groceries, and
different things like that. So think about it this way, earlier on when you're starting
off, like if you're my age, you take your dividends
and you reinvest them in order to get the greatest
return on your investment over the long run. And then the goal is when
I'm in my 50s or 60s, is to then live off of
that dividend income from your stocks. That way, you know, maybe
you have a bunch of shares of Coca Cola or IBM or
something like that, and rather than reinvesting that money back into those stocks
to have more shares, you actually just take
those cash dividend payments and you use them for your expenses, rather than working for your money. That right there, that's what
we call the dream here guys is to live solely off of dividend income. That way you can choose
what you do with your time. So that's kind of the
big picture here guys of why people invest in dividend stocks. Another thing that you
should be aware of is that when you're talking about dividend stocks, a lot of people refer to something called the dividend yield, and that
is simply the percentage you're earning as a return
based on the entire share price. That sounds a little bit confusing but let me give you an example here. Let's say you buy a stock,
that's $100 for one single share, and over the course of one year, they pay you $5 in dividends. Well, that means that
this particular stock has a 5% dividend yield. And so assuming that
dividend doesn't change, if you buy shares today at $100, you're gonna earn a 5%
return on that invested money in the form of dividends. Now, as far as yields go, typically looking at dividend stocks, you're gonna be in the range of two to 5%. However, a lot of people think, oh, let me just go out there and
buy 5% plus yielding stocks. But I'm gonna tell you later on why that might actually be a mistake. So more on that later. And then the last thing I wanna
cover in this section here is there's a couple of different dates that you should be aware
of as a dividend investor, because you're going to
come across these terms and you might just be confused. So let's cover those right now. So the first date that you
should be familiar with is called the declaration date. This is when the company
board of directors or the people who make decisions on the behalf of this company,
actually approve a dividend. So this is when a company says yes, we're gonna pay a dividend
and it's this amount of money. So they announce the amount
of dividend per share and also after they do the
dividend declaration here, they also announce the date of record as well as the payment
date for that dividend. And let me explain what
that means right now. So the payment date is
pretty self explanatory. This is the actual day that
you're going to see the dividend credited to your brokerage account, or if you're getting
mailed dividend checks, this is the day that that dividend check is probably going to go out in the mail and you should expect it
a couple of days later. But then we have the date of record. And before I explain what that means, I actually have to cover something else called the ex-dividend date, really confusing stuff here,
guys, but I promise you, it'll all make sense after I explain it. So the ex-dividend date
is simply the cutoff date in order to receive the dividend. Because at the end of the day, you can buy and sell
stocks on a daily basis and so you need to have a cutoff date for when you need to be on
the books as a shareholder in order to receive that dividend. Because let's say for example, somebody sold the share of Coca Cola and then somebody else bought it, it becomes this complicated
decision of like, which person gets the dividend. This is why you have to
understand these different dates. So the ex-dividend date is simply the date that you
have to own the shares by in order to receive the upcoming dividend. So if you buy the stock one day
before the ex-dividend date, that means you are going
to receive that dividend. However, if you buy shares of that stock on the ex-dividend date or after it, you are not going to receive the dividend. It would actually be the
person that sold you that stock who would receive that quarterly dividend. So if you're looking around
at dividend stocks out there and deciding which ones to buy, take a peek at this ex-dividend date and make sure you're able to
buy shares before that date, that way you're eligible to receive that first quarterly dividend. Now after the ex-dividend
date or the cutoff date to receive the dividends, there's that one other date
here called the date of record, which is one business day
after the ex-dividend date. You really don't even need
to be aware of this date here, guys, that is
basically just the date that you have to be on
record as a shareholder in order to receive that dividend. This might be a little bit confusing here but there's something called
settlement of an investment. And it takes a couple of days
for your investment to settle and you have to be settled in order to receive that dividend. That's why most people just
focus on the ex-dividend date. So to be completely honest with you guys, all you have to do is make
sure that you buy shares one day before the ex-dividend date in order to receive that dividend. So there we go, confusing topic anyways. Moving on now to section two, let's cover the difference
between dividend stocks versus growth stocks. So as mentioned earlier, there
are some companies out there that are solely in growth mode, which is where they're
taking their revenue and they're taking their profits and they're putting it
back into the business. They're not doing dividends because they wanna reinvest that money and they wanna grow as fast as possible. This is what we call a growth stock. And then there's other
companies out there like AT&T, that don't really have a
good way to grow the business and the share price as a result. So instead, they pay a
lot of money in dividends in order to keep shareholders around. And this is simply because
there's two different ways that you're able to make money, when you invest in the stock market. The first one pretty straightforward
that we already covered is earning dividends or cash
payments from your investments. But there's actually a second
way to make money with stocks that we kind of alluded to earlier, and this is when you buy
a stock at a given price and sell it for a higher
price down the road. And this is simply called
asset appreciation. So for example, if you bought
a stock at $50 per share, and then you sold it
for $60, a year later, you have a $10 profit
or $10 of capital gains. That stock or that asset
appreciated in value while you owned it. And the reason why that
stock went up in value is usually due to something
involving revenue growth or business growth. Essentially, as the company grows and the company becomes more valuable, the share price goes up as a result. And those are the two ways that you make money with the stock market, either through the share
price going up in value, or from these dividends. Now one thing that I like
about dividend investing and there's a lot of
reasons why I like it, which is why I do it, is the fact that you don't
actually have to sell your shares in order to make money. Because the thing is, if you
are just a growth investor and you invest in growth stocks
that don't pay dividends, the only way you can make
money is asset appreciation or buying low and selling high. Well, in order to take profits, you actually have to
sell some of your shares and recognize those capital gains. And when you do that, you
expose yourself to taxes, there are taxes with dividends too, but it's a little bit different. That's kind of above and
beyond the scope of this video. But it is something that you
should be aware of is the taxes when it comes to dividends,
it's a little bit different than capital appreciation or asset
appreciation from stocks. But I like it because when
you own dividend stocks, you get paid while you own the stock, you don't have to sell it
in order to make money. And the other interesting thing is that it's not one side or the other. It's not like some companies
are in 100% growth mode, and others are in 100% income mode. Sometimes it's like that but there's also companies
that fall in between, they are still growing, and they have means of
growing their business and earning more revenue and growing sales and things like that. But there's also companies that
fall somewhere in the middle where they have a means
of growing the business and making more money, but
they also are paying dividends. And this is a category called
dividend growth stocks. And this is my favorite
type of investment. The dividend yield isn't
going to be as high because the company's not paying all of their profits in dividends. They're paying some of
the profits in dividends but they're also
reinvesting a lot of money back into the business,
meaning the business is growing and as a result, hopefully, the share price is growing as well. So just for an example sake, a company like Amazon
is 100% in growth mode. They don't pay dividends, they just wanna grow the
business and they wanna dominate and as a result, the share
price has gone up quite a bit. Then we have other stocks like AT&T. They haven't really grown
their business that much at all and as a result, the share
price is pretty much flat, but the dividend yield is really high. Then you have companies in
the middle such as Apple, one of my favorite stocks out there. They pay a small dividend but they also have a
lot of growth potential. So you're able to get paid
in two different ways, you earn those cash dividends,
you can reinvest them and as that happens, the share price tends to go up in value as well. So that is why dividend growth stocks are my favorite investment,
especially being a young person because I can be a little
bit more aggressive. And I like the fact that I can get paid in two different ways. So I could go pure income play here and solely invest in these stocks that are just paying high dividends, and they're not really growing and I could get my portfolio
to a five or 6% dividend yield. But then there would be very little growth of the underlying share price. And so I would really only be making money from those dividends and not from the growth of my portfolio. So instead, I invest in
a lot of these dividend growth stocks, I have a
lower yield and of around 3%, which I'll show you in a little bit, but it allows me to
have asset appreciation as well as dividend
payments from my stocks. And in my opinion, that gives
me the best of both worlds. So now what I wanna cover here is the difference between
buying dividend stocks versus investing in
high yield dividend ETFs or exchange traded funds. And if that's a foreign term
to you guys, don't worry, I'm going to explain that right now. So the strategy that
we've discussed so far is picking and choosing individual dividend stocks to invest in. So you sit down at your laptop and you do your research
on these companies, and you decide, yeah, I wanna
buy shares of Coca Cola, or AT&T or Apple, and you pick and choose what individual companies
that you wanna own. But there's actually a different way that people earn dividends
in a really easy way, and that is by investing in high yielding index funds or exchange traded funds. And instead of investing in
just one or two companies, you're actually investing
in a whole basket, in some cases of hundreds
of different companies that all pay dividends. So basically, instead of
putting all of your money into a handful of different
stocks, and analyzing them, you don't do any analysis,
you simply plop your money into a high yield fund and
then you earn dividends from that fund on a quarterly basis. Essentially, every stock within
that fund pays dividends. And then collectively, all of
those dividends are paid out on a quarterly basis and overall, that fund has a set dividend yield. And in a little bit,
guys, I'm gonna show you my top three favorite
high yield dividend ETFs, and it's going to make a lot more sense. But essentially, what we're talking about is the passive dividend investing strategy which is investing in funds,
where it's very hands off, you don't have to do research, and you don't have to really
keep up with your investments, you just put it in the fund
and you're well diversified. And then there's the active side of it, which is picking and choosing exactly what companies you want to invest in. There's no right way or
wrong way to do it, guys, it just depends on your
individual strategy. Personally, I like
owning individual stocks. It's kind of like fun for me to say, oh, I love apple and
I own shares of Apple. But you may decide it's
too much of a headache and you'd rather just put
your money into an index fund and not have to do all that research. I just want you guys to be aware of all the options that
you have in front of you. So now what we're gonna do is we're gonna jump into my computer, and I'm gonna do a screen share, and I'm gonna cover my top
three favorite dividend funds. And then we're gonna cover as well, my favorite dividend stocks. Once again, guys, I just wanna mention I'm not a financial advisor, and do your own research
on these investments. And I'm certainly not
making any recommendations to go out there and buy
them or whatever, like, do your own research
and don't like blindly pick my investments just
'cause I picked them. I'm simply showing you
what options are available. So let's jump right in. Okay, guys, so the very first high yield dividend ETF I wanna talk about is the Vanguard high dividend yield ETF trades under the symbol VYM. When it comes to buying
index funds or ETFs, you really can't go wrong with Vanguard. They pretty much have some
of the best quality products out there with the lowest fees. So when you're looking at these funds, besides the dividend yield, the main thing we wanna look
at here is the expense ratio, which is how much money
you're paying in fees. With Vanguard, it's a minimal fee of 0.06% for this particular fund. That is very low and probably
lower than you're gonna find anywhere else as far as index funds go. This is pretty much a fund that owns a basket of different stocks, and we're gonna get into
it and I'll show you what companies it owns and some
different details about it. So right now, if you're
looking to buy shares of VYM, they're gonna cost you $91.63 per share. But in a little bit, I'm
gonna show you how to invest using fractional shares. That way, you don't even
really have to care about this share price at all. And more importantly, what is the yield? Well, over the last 30 days, the yield of this fund is 3.25%. So it's certainly not a
five or 6% dividend yield. That's because you're investing in hundreds of different dividend payers, some pay higher dividends, some pay lower, and overall it's three and a
quarter percent is your yield at the current share price. Under this section here, you
get more information about what is in this fund. And I'm not gonna go into this much detail with all these ETFs, guys, because a lot of them are
gonna be pretty dang similar. But this one right here
gives you information about what is in this fund. So first of all, this fund holds 414 different dividend paying
stocks and the average size of the company held here is 118 billion. If you scroll down here it shows you what sectors you're investing
in or areas of the economy. So you can see a lot of the money here is in the financial sector. That is because financials tend to be good dividend paying stocks. It's a very consistent business. Healthcare is pretty high
here as well at about 14%, consumer staples, another
great place for dividends. So it tells you what areas of the economy you're actually investing in. And then one of my favorite parts, it shows you the top 10 largest holdings which represents 24% of this total fund. And that is Johnson and Johnson, which is a stock that I own, JP Morgan, I don't own that one. Procter and Gamble, I own it. Verizon, I own it. Comcast, I don't have that one. Bank of America, I own it. Pfizer, that's a hot one
right now, I don't own Pfizer. Walmart, which I don't own. AT&T, I do not own. And Intel, which is a
stock that I currently own. So this shows you kind of you know, what stocks are within this fund. And then over here on
the distributions tab it's showing you when
the dividends are paid. So in this case, there was a
dividend paid on most recently, September 22, of 2020, of 70 cents and some change. And then we have the very
important ex-dividend date we talked about earlier, which in this case was September 21. You would need to have bought shares at the latest September 20 in order to receive this dividend. If you bought it on this date, you would not receive the dividend. The person before you who sold it to you would actually be the one receiving it. But there you go guys, it's a
quarterly dividend paying ETF and it's a pretty quality option. So next up we have the
Schwab US dividend equity ETF which is gonna be very
similar to that Vanguard one. In fact, it has the same exact
expense ratio at just 0.06%. And it trades under the symbol SCHD. And then here we have the
yield of this which is 3.6%, which is a little bit higher
than the Vanguard fund that we looked at a second ago. Now if we open up the
portfolio section here, it shows us what stocks
are held within this fund from largest to smallest. And we're seeing some
different names here. The biggest holding here is Qualcomm, they also have BlackRock,
Texas Instruments, Exxon Mobil, Coca Cola, another one from my portfolio. This one also has Pfizer, PepsiCo, 3M, which is a stock that I own, UPS and IBM another stock that I own. Just like with Vanguard it also shows you what sectors are being represented. This one's a little bit
heavier in financials and it goes largest to smallest. And then here we have the
most recent distributions which are on a quarterly basis. And visually, this is a
little bit easier to follow with our ex-dividend date, the record date and the payable date. So again, this fund here just
had a dividend announced for December 15 and you would
have had to purchase shares at the latest on December 9, in order to receive that dividend. If you bought it on December
10, the ex-dividend date, you would not receive that dividend. And then the last fund
I wanna talk about here is a little bit different. It's also a Vanguard product, but it's actually something called a REIT, or a real estate investment trust, which is another popular
investment for dividend investors. And the big difference
here is the other funds that we looked at already own stocks, whereas a REIT actually owns real estate which has a good means
for producing income. So essentially, a REIT collectively earns the rents from the properties
and of property sold, they collect all that money and then they pay out a
dividend to the shareholders. And it's a pretty decent way to also earn passive dividend income. So I wanted to make
you aware of this here. As far as the expense ratio goes, it comes in a little bit higher at 0.12%. But to be honest with you guys, that's still pretty dang low. The current yield for this Vanguard REIT is a little bit higher here at 4.11%. So oftentimes, you may
find that these REIT ETFs actually have a higher
yield than these traditional dividend ETFs that hold stocks. And there's one other thing
I wanna mention quick here. There's a popular investment out there that trades under the symbol O, which is the Realty Income Corporation. This is one of the most
popular investments out there when it comes to REITs. It's an individual company
that owns a lot of real estate and they're actually a
monthly dividend payer. So the advantages here,
just like with real estate where you get your rent
check every single month while with Realty Income Corp, you actually get your dividend every single month just like a rent check. I actually don't invest in REITs at all that's because I own invest in real estate in a separate portfolio. I have some physical
real estate investments and I also have some crowdfunded
real estate investments. So I already have enough
real estate exposure. So I personally don't touch the REITs, but it is an option that you should know is available to you. So now that we've covered some
different high dividend ETFs now we're gonna jump into my portfolio and talk about some of my
favorite dividend stocks. So here we are inside of my portfolio. I use a commission free
brokerage called M1 Finance, they don't charge any management fees, they don't charge any commissions and you can get started
with as little as $100. I actually have a completely free training that walk you guys through step by step how to get started with M1 Finance and build a dividend portfolio. If you wanna check it out,
guys, there's a link down below, all you have to do is click it. After you click on that, it's gonna bring you
to this page right here where you're going to click this button and you're going to
drop your name and email and I will send you right over
the link to view that free 30-minute training on
how to use M1 Finance. Full transparency here guys, I am affiliated with M1 Finance so if you do use my affiliate link, I may earn a small
commission in the process. But as you guys can see, this is the actual brokerage
where I invest my money. I'm a big fan of M1 Finance
for dividend investing. So it's a resource that
you may choose to use. And if you wanna give back to me for putting this video together, feel free to use my
affiliate link but of course, no pressure whatsoever. Now in a little bit here,
I'm gonna show you guys my actual holdings and how
much I earn in dividends from this portfolio and my overall return. But for now let's talk
about some of my favorite dividend stocks out there for beginners. So the first one is 3M, which is a stock I have in my portfolio. This is a conglomerate that
owns a lot of smaller brands, like Post-it, command strips, they own all kinds of smaller
brands and collectively, these brands make a lot of money. And that is 3M in a nutshell. It's a large conglomerate that's heavily involved
with industrials too. And they currently have a
dividend yield of 3.32%. Now another thing that
you should be aware of is, for the most part, I'm investing in something
called a dividend aristocrat. And this is a highly sought
after list of companies that have not only paid
dividends consecutively, but they've grown them every single year for 25 years or more. So if you're looking for
a good starting place with dividends, I would
recommend looking at that list of dividend aristocrats. We'll take a peek at it right now just so you guys are aware
of some of those companies. So currently there's only 66 companies that have made this list, and these are all companies
that have grown their dividend as I said for 25
consecutive years or more. Not surprisingly, the
very top of our list here is the stock we were
just talking about, 3M, which has 57 years of consecutive dividend payment and growth. A pretty awesome record there. So this is a good place to start if you're doing research
on dividend stocks. And you're gonna recognize
a lot of these names when you look at my portfolio because I own a lot of dividend aristocrats. So the next stock on my list here, none other than Coca Cola, a Warren Buffett approved investment. Not much needs to be said here guys, this has been a great quality investment people have been making
for many, many years buying shares of Coca Cola. I mean, obviously anything can
happen with the stock market, it could go up or it could go down. But Coca Cola has been
pretty solid for me at least. And they currently pay a
dividend yield of just above 3%. Next up we have GPC which
is Genuine Parts Company one of my favorite stocks that I own. This is actually the
parent company of Napa. So if that logo and color
scheme looks familiar, that's probably because
you've seen the Napa stores. I like this stock for many reasons, I'm not gonna get into a ton here. One of the main reasons
is because Napa stores tend to do really well during a recession because people hold on
to older vehicles longer and they're making
repairs to older vehicles. So it's kind of a good
recession proof business, currently with a 3.23% dividend yield. Next up we have none other
than Johnson and Johnson, a diversified medical and
pharmaceutical company a recent addition to my portfolio. Currently pays a dividend
yield of around 2.6%. And then we have Procter and Gamble, which is another recent
addition to my portfolio. This falls under the consumer staples. They make things like razors and dish soap and all these important
products that we use in our everyday lives. As a result, another very
good recession proof business, and they currently pay a
dividend yield of 2.26%. Next we have Target. I actually don't own this stock, but it's definitely on my watch list. The dividend yield isn't as high but if we look at the
performance of the stock over the last five years,
it's done pretty well. So this again is why I like
dividend growth investing because you have the
potential to make money from the dividend as well
as the asset appreciation. I mean, over the last five years, this stock went from 70 bucks a share all the way up to somewhere around $170. Next up, we have McDonald's. I don't often eat there, but I do own the stock because I like it. They currently pay a dividend
yield of around 2.3%. And then lastly, we have Caterpillar, which is a large construction company, they're also involved in manufacturing. Over the last five years this stock has done pretty dang well too. So you have a good mix here
of both asset appreciation, as well as dividend income, currently paying a
dividend yield of 2.24%. So now let's take a look at my M1 Finance dividend portfolio and, you know, take a peek under the hood here and see what we're looking at in terms of how much money I've made from asset appreciation,
or, as we're calling it here market gains versus dividends. So a couple of things I wanna say here. First of all, I was able to
invest a hefty amount of money earlier this year, during the pandemic. As you can see, you know,
I ramped up my investments pretty quick here and by you
know, somewhere around June, I had invested over $75,000. And the thing is, this
was a really good time to be investing in the stock market because overall it was down. And then there's been a
couple of points in time here where I've ramped up my
contributions quite a bit. And overall, I'm thrilled with how this portfolio has performed. In terms of the breakdown, I have made $2,792.60 from dividends, and I've made $21,593.95 from market gain or asset appreciation. This has been a pretty crazy year because of the whole pandemic, gains have been crazy
with the stock market. So you're not gonna see
this on a typical year with the stock market. Right now I'm not funneling any more money into this portfolio
just because 170 grand, that's a pretty good chunk of change here. And I'm making other
investments in real estate, I'm making angel investments
in other companies. So right now I've got enough
money in dividend stocks that I'm not adding more money. But what I am doing is, every
time I earn more dividends, I'm reinvesting that money
across this entire portfolio. So with M1 Finance, it's a little bit different
than other brokerages because what you're doing is
you're creating this pie here, which is your portfolio, and you essentially assign
a percentage to each stock. So over here on the right you
can see my target percentages, which for most of these is 6% and for the bottom too it's only five. And so when you build your
portfolio, you say, hey, I want 6% of my money in Bank of America, 6% in Emerson Electric, and so on. So you just set your percentages and it automates the process
of distributing money into these shares. And then of course because
of the magical invention here of fractional shares, the actual underlying share
price doesn't really matter because you're able to buy a fraction of a share of these stocks. So for example, if we
look at Bank of America, you can see that I own 458.1724 shares. Since I'm able to buy fractional shares, I can own a little
piece of Bank of America and remain fully invested. So that's why I really like M1 Finance for dividend investors, you
have a lot of very useful tools right here at your fingertips. Now if we jump over to the activity tab, you can see where I'm earning
dividends in this portfolio. I actually earned some dividends recently and they were two market
buys today on December 16, in the amount of 143.09. And based on my current percentages, that money went into
Johnson and Johnson stock and Procter and Gamble, just because I'm low on
these investments right now and I haven't reached
my target percentage. But where did that money come from? That came from my dividends, which were from McDonald's and Coca Cola. So I'm consistently earning
dividends in this portfolio as a result of owning
these individual stocks, and then that money is automatically reinvested back into the portfolio, allowing me to earn compound interest. And if you look at the holdings tab here, this paints a better picture for the overall performance
of this portfolio. This includes both the capital gains or the gains from the market as well as money earned through dividends. And overall, I have had
about a 13.72% return or exactly 13.72, and I've made about $20,700 from this portfolio. That's if I sold everything right now, which obviously I'm not, but that's the current
gains in this portfolio. I'm not gonna cover the whole thing here just because I have a whole series where I document my dividend portfolio. I have 17 different stocks
here, I'll scroll through it so you guys can pause
the video if you want to. But we'll go over my
top five biggest winners and top five biggest losers just for fun. My best investment so far has
been none other than Lowe's, I'm up almost 70%. Number two Emerson
Electric, I'm up about 50%. Number three, none other
than Apple, I'm up about 40%. Number four, Genuine
Parts Company, I'm up 21%. And number five Caterpillar up around 20%. And as far as my losers go, I've honestly done pretty well here. I'm only down in one stock
currently which is Intel down around 5%. I just added these a couple of days ago, so they haven't really gone anywhere. That's Procter and Gamble
and Johnson and Johnson. Verizon, I'm only up like 1% and then Merck and Company,
I'm only up about 2%. And then as far as my
portfolio goes as a whole collectively it's currently earning a dividend yield of 2.687%. Like I said earlier,
that's because I mostly own dividend growth stocks. I'm not looking for like a 5% yield because I want a blend
of asset appreciation, as well as income from dividends. But to calculate how much money this is, I'm gonna pull up my
calculator and I'll show you what I'm earning in passive income from this portfolio
right now in dividends. So we know that my current portfolio value is around $172,000. And now we simply multiply this by my current dividend yield. And the current dividend yield is 2.687%. So we'll do 0.02687. And so in total right now I'm earning $4,621.64 per year in dividends, which is automatically being reinvested back into this portfolio. And that's really what
gets me excited here guys about dividend investing is the
fact that I'm doing nothing. I'm just letting my money sit
here in these dividend stocks and I'm making about $5,000 per year, which is being reinvested
back into the portfolio and every single year
that $5,000 is gonna earn more dividends, and then the
dividends earn dividends, and you have this magical phenomenon known as compound interest that begins seriously
accelerating your wealth. So there you go, guys,
that's my portfolio wrap up, let's get into the rest of the video. All right guys, so you
got a quick peek there at my portfolio. I hope you enjoyed looking in there and kind of seeing my investments. And I also do an ongoing
series where I'm building, what was $100,000
dividend stock portfolio. It's grown to be quite larger but I do regular updates on this portfolio and I kind of share the performance. And so if you want, I will link up to that
playlist down below, if you wanna check out
the previous videos, if you're curious how
I built this portfolio over the last 12 months. And also guys, if you've made
it this far to the video, I'm assuming you've enjoyed it. If you don't mind, just
go ahead and drop a like for that almighty YouTube algorithm. It definitely helps to get this video shared with more people. And you can always do
your part as well and, you know, share this
video with some friends if they're trying to also learn the basics of dividend investing. What I wanna cover now are the main dividend investing mistakes that people make early on. Some of them I've made myself, that way you can hopefully
avoid these yourself. So the first and biggest by
far dividend investing mistake is chasing high dividend yields. And this comes back to a big misconception that we addressed early on, which is some people think
that dividends are guaranteed, that companies are required to pay them and all the companies out there pay them. That's not true. A dividend is a decision
that a company makes to share a portion of
profits with shareholders, they can change their
mind at any point in time. The board of directors decides
what they pay for dividends and at any point in time,
they could say, hey, we don't wanna pay dividends anymore. Now they know if they do that, that most people who own
that stock would sell it and it would go down. And so overall, companies tend
to continue paying dividends and they tend to continue growing
those dividends over time. But you just need to be
aware of this fact that dividends are not
guaranteed, they can go up, they can go down or they can be canceled at any point in time. So what happens is,
you get these companies that are falling under financial hardship. What happens when a company
falls under financial hardship? The stock goes down in value. But what this does is it
inflates the dividend yield. So let's say for example, a stock was trading at $100 per share and it paid $5 per year in dividends. Well, we know from earlier that would be a 5% dividend yield. But then let's say a bunch of bad news comes out about that company. The business isn't doing well and they're losing a ton of money. So the share price falls to $50 per share. But you know what happens as a result, now you're looking at that
and you're saying, hey, 50 bucks per share and I'm able to earn $5 per year in dividends,
now all the sudden, it has a 10% dividend yield. And so a lot of people see
that and they're thinking, wow, guaranteed 10% return, count me in. But what they don't realize is that there's a reason that yield is so high, it's an unhealthy yield because the company overall is not doing well. So you have to look at the
overall bigger picture. If you see a company with
a six, seven, eight, nine, 10% dividend yield, do a little bit of
research on the company. How's the business doing? How's revenue? Are there any problems with the industry? Most of the time there is. And so what happens to people is that they buy a stock because
they see a 10% dividend yield and then a couple of months later, the company announces a dividend cut or they eliminate it entirely. And then you're stuck holding the stock that's not paying dividends, and the share price is
going down in value, and you're just like, you've
been duped at that point. So don't do that, guys, don't
chase high dividend yields. And if you're gonna buy a stock with like a seven or 8% yield, do a lot of research beforehand, because that's a high yield
and oftentimes it's a red flag. The next mistake is
putting all of your money into a few stocks. This again, ties back to the fact that companies can cut or eliminate
dividends at any time. So basically, if you only
had all of your money in one stock, like let's say, for example, you decided to put your
entire portfolio into AT&T. They've been paying and growing
dividends for a long time. Hopefully they continue to, but let's say worst case scenario, all of a sudden AT&T they make some really
bad business decisions and they're losing millions of dollars. So what are they gonna have to do? They're gonna have to cut their dividend. Well, let's say for example, all of your money is in AT&T stock. Well, if they got rid of that dividend and you were like living off of it, well, all the sudden there
goes your means of income. So especially if you're somebody who is living off of your dividends, you don't wanna put all of
your money into one stock because that stock could
eliminate that dividend and then you're stuck holding this company where you have no means
of earning income from it. So that's dividend investing
mistake number two. All right, so the third
mistake people make not doing your research. Do your research, guys,
we already covered this. Especially if you're buying
a high dividend yield stock, literally do 10 minutes of
research on the company, please, just to make sure that
the company is doing well and there's nothing like
looming on the horizon that could be really bad. For example, back in when
the global pandemic hit, Ford stock was showing a
really high dividend yield of around 10%. I know a bunch of people who bought it thinking they just got
the deal the lifetime, and then Ford ended up
getting rid of their dividend, I believe, and so that's something where before you buy Ford stock, do some research and
understand what's going on and what's the bigger picture. Another mistake people
make is losing patience. Dividend investing is not
a get-rich-quick scheme. It's very slow at first, especially when you have
a smaller portfolio. But you have to understand this is like a 20, 30 year
investment for some people, like, I'm probably gonna
have this dividend portfolio for the next 40 years. So you gotta think about
the long run, and you know, the potential for your
money to grow over time it's not gonna be like super
exciting at the beginning. And lastly, the final
mistake for young people is not reinvesting your dividends. Unless you're like living
off of your dividends or you need that money, you should probably just put
it back into your portfolio that way you can maximize your returns. There's always the chance that, you know, that the price of your
shares could go down. But for the most part if
you're diversified guys, reinvesting those dividends allows you to earn compound interest, and that's gonna maximize your
returns over the long run. So anyways, guys that is
gonna wrap up this video. I hope you enjoyed it. It was a marathon video, but honestly, I really enjoy making these tutorials. I know my contents kind of been all over the map lately with YouTube. But I think this is where
I'm gonna stay here. I like making these very helpful videos that kind of give you all
the information you need, no fluff, no courses and it's
not a pitch fest, you know. I'm really just here to provide
value at the end of the day and I hope it came across that way. If you did get value from
this video, like I said, a thumbs up would be great. And leave me a comment down below with your favorite dividend stock, or if you're currently investing, you know, let me know how that's going and I'd love to get the
conversation started down there. Like I said, I use M1 Finance
for my dividend portfolio, if you choose to as well, I have that free training down below that shows you step by step how I was able to create
this dividend portfolio. And full transparency here guys, I am affiliated with M1 Finance. So if you use my link, I may earn a small
commission in the process. But thanks so much for watching guys. Subscribe and hit that bell
for future notifications and I hope to see you in the next one.
