My Dad (@FrankDanna6, who never uses his Twitter) and I have been on a journey together learning how to invest. Usually when we sit down for a meal, or chat on the phone, we are talking about our current positions and new fangled investing strategies. That being said, I would consider us both novice investors (me more than him). About a year and a half ago, he gave me a book titled “Get Rich with Dividends” by Marc Lichtenfeld (@stocksandboxing). I read through it, and was chomping at the bit to apply the strategies to my portfolio. If investing isn’t something you are interested in, or if you haven’t considered managing the money in your retirement account, I would strongly recommend this book. This book will provide to you the tools in order to understand YOUR money and how to make that money truly work for YOU. This post is not intended as investment advice, most of all it is simply to provide some insight. I believe that my generation is becoming very “hands-on” with their money. Personally, I would rather look after my own retirement account than pay someone to do it. If you would rather pay someone, continue reading, because perhaps you might gain an understanding of how important dividend stocks may be for your long term investments. If you are serious about any type of investing, there are obviously risks associated with it.
Prior to reading this book, I had several companies I held stock in. Most of which were “sexier” blue chip companies such as Apple or Facebook. These stocks, in many instances, require a good bit of capital to own. For example, Apple is close to $116 per share. This is not to say that these companies are not affordable for you to own, in fact, you may already own them. One of the things I love most about investing is that you can take multiple strategies and make them your own depending on your risk tolerance. The strategy I have taken is to invest in companies which have consistently released a dividend for several successive years. They key word here is “compounding”. The book by Mr. Lichtenfeld teaches that using dividends and compounding over time will allow you to accumulate larger returns even if you are a less aggressive investor. He suggests to go after less “sexy” companies, companies which have a history of increasing dividends as well as powerful financial statements throughout the years and use those companies as the primary strategy to grow your portfolio. Again, I am certainly not a professional investor. I do believe, however that no one is going to take care of my money like me and have elected to manage my own investments. Using this type of investing, you are able to be more flexible and “hands-off”. In other words, you don’t have to sit in front of the television everyday watching the markets tick.
It seems to me, based off of my chatting with other “Generation Y” friends and family, that time is what they fear the most. They envision having to sit in front your computer screen logged onto your brokerage account…watching. That is not the case with this type of investment strategy. During the day, I usually keep my stock ticker on my computer screen, but that is not for me to make position changes. It is really just because I am curious to see where the stock is headed for the day. Dividend investing is most powerful when you vet each and every company and ensure it is right for you, then largely ignore the news and fear that comes along with it. The market goes up and down, that is just the way it is. Shifting investments around constantly doesn’t work (ask me how I know..ouchie), especially if you don’t have the access and capability to do so. Using historical data, and the financials of each of your companies provides most of the data you need in order to make an informed decision as to whether or not to add it to your portfolio.
Below you will find the primary resource I have been using for my decision making, and is also suggested by Mr. Lichtenfeld. It provides historical data for companies which have released an increasing dividend by category: Champions (25+ straight years of higher dividends), Contenders (10-24 straight years of higher dividends), Challengers (5-9 straight years of higher dividends). Visit the site and see what you think, I am sure you will find it stimulating.
My goal with this post is simply to inform. I hope that if you are in my age group, (or younger) you are thinking about money in retirement. This could be a major issue facing our generation in the future, and I believe that we should do what we do best: talk about it, trade ideas, and support one another.
Thank You for Reading.
– Frank (@txbikeguy)
www.dripinvesting.org: Click the top left pane for Tool and Tools and you will see the U.S. Dividend Champions.
www.getrichwithdividends.com: Marc Lichtenfeld’s book “Get Rich with Dividends”
www.foxbusiness.com: I use Fox Business in the morning, because I dig Stuart Varney (@Varneyco) and Charles Payne (@cvpayne)