Hello Everyone,
Today I’m going to cover dividend paying companies. Over the past few months the stock market has
been extremely volatile. It has been a
very frustrating time period for many investors. Wouldn’t you like to ease your frustration? Of course you would! That is why during times of uncertainty dividend
stocks tend to not move in such an erratic manor.
I mentioned dividends in one of my posts last year, but it’s always good to
revisit great investment strategies. First many may ask, what is a dividend?
A
dividend is a portion of the earnings a company generates to give back to the
shareholders of the stock. A large
portion of companies pay out a dividend on a quarterly basis to their
shareholders, meaning every 3 months.
There are many advantages for investing in dividend paying companies
1.
Dividends serve as a source of income at retirement
2.
They can be reinvested to buy more shares of stock
3.
They add value to companies that have slowed in growth
4.
They are taxable at 15%, which is much lower than
ordinary income
5.
Companies can raise the dividend payout as earnings
increase
6.
Dividend paying stocks have a higher yield than a
savings account
7.
Potential for stock to appreciate in value, while
paying a dividend
I’m sure I can think of a few more, but you get the idea.
The one thing I like to point out to everyone
is during stock market uncertainty the amount of the dividend payout doesn’t
change.
Unless of course the company is
in financial trouble.
That’s why many
institutions and fund managers pour money into dividend paying companies.
Dividends allow for stability and income.
This is also how many investors make their millions.
Take for example Warren Buffet’s company
Berkshire Hathaway. Berkshire has an
8.71% stake in
Coca Cola
(KO) owning 200,000,000 shares.
I always use
this example when I speak about dividends since Warren Buffett is by far the
greatest investor during my lifetime.
Currently Coca Cola pays a 2.70% yield. That is equal to $1.88 a share a
year or $0.47 a quarter.
That means
Buffett’s company gets paid $94,000,000 a quarter ($376,000,000 a year) to own Coca
Cola stock.
That right there is the
secret to amassing wealth. Dividends!
On
top of that the dividends can be reinvested to buy more stock.
In Buffett’s case Berkshire Hathaway could
potentially reinvest all of its dividends.
If the stock price stayed stagnant at today’s closing price of $69.38
all year an additional 5,419,429 shares could be bought. And with the power of
compounding the additional shares reinvested over time would continually increase
in size.
It’s essentially an ATM
machine!
That said each and every person has an opportunity to take advantage of
companies that pay a dividend.
This
allows investors to share in the company’s profits.
It drives me crazy when people talk bad about
Wall Street and how they never do anything good for people.
I say dividends!!! Ding! Ding! Ding!
Using a company’s money to reinvest in that company to build wealth overtime
is a no brainer.
Quit wasting time and
go buy yourself some dividend paying companies!
Here are a few stocks along with their current yields.
This should help you get your research
rolling!
AT&T (T) 6.20%
Verizon Communications
(VZ) 5.70%
Merck (MRK) 4.80%
Pfizer (PFE) 4.40%
Intel (INTC) 4.30%
General Electric (GE)
4.00%
Johnson & Johnson
(JNJ) 3.60%
JP Morgan Chase (JPM) 3.10%
DuPont (DD) 3.60%
Travelers (TRV)
3.40%
Proctor & Gamble
(PG) 3.40%
Chevron (CVX) 3.30%
Home Depot (HD) 3.10%
McDonalds (MCD)
2.90%
Wal-Mart (WMT) 2.80%
Clay-
“When in doubt buy more!”
Current Holdings:
Apple (AAPL)
Cosi Inc. (COSI)
Weatherford International (WFT)
