💸 8 Rules of Dividend Investing
Every Wednesday it’s Dividend Day.
In this series, I will teach you 5 things about dividend investing in less than 5 minutes.
⭐ Big announcement ⭐
Next Saturday (12 October), we have a big announcement to make.
Starting then, Compounding Dividends will evolve into a full investment platform.
Stay tuned and make sure you don’t miss out.
1️⃣ Dividend payers are assets
Dividend-paying companies are valuable because they provide you with regular income.
They also tend to be stable and can continue growing, making them great long-term investments.
2️⃣ Dividends offer security and growth
From January 2008 to the market bottom in 2009, the S&P 500 dropped by over 50%.
Dividend growers fell by less than 40%.
No matter what happens to the stock price, you will keep receiving your dividends if you invest in healthy dividend growth companies.
3️⃣ A dividend quote
Mark Cuban is a billionaire and the owner of the Dallas Mavericks.
He's also on the TV show Shark Tank where he invests in small businesses.
“I believe non-dividend stocks aren’t much more than baseball cards. They are worth what you can convince someone to pay for it.” - Mark Cuban
4️⃣ 8 Rules of Dividend Investing
Ben Reynolds wrote a paper on his 8 rules for dividend investing.
Here's a quick summary:
- Choose stable, profitable companies.
- Aim for a mix of high yield and dividend growth.
- Look for sustainable payout ratios.
- Sell if the stock gets too expensive or the business weakens.
- Diversify, but not too much.
The image shows that 12 to 18 stocks provide most of the benefits of diversification.
Click on the picture to access the full PDF.
On Saturday, I’ll share my Dividend Investing Philosophy with you.
5️⃣ Example of a dividend stock
The Hershey Company was founded in 1894 (!).
They make money by selling chocolate and candy, including brands like Hershey's, Jolly Rancher, Cadbury, Twizzlers, and Reese's.
- Profit Margin: 22.7%
- Forward PE: 21.3x
- Dividend Yield: 2.7%
- Payout Ratio: 56.6%
Source: Finchat
That’s it for today
Stay tuned for our announcement next Saturday!
In case you missed it:
Used sources
- Interactive Brokers: Portfolio data and executing all transactions
- Finchat: Financial data