Quick show of hands

Who doesn't like free money?!

What's the catch?

You'll have to invest your money for a LONG time

Take a look at

"Living Off Dividends"

~ THREAD ~

1.

First off

What's a dividend?

This is a way a company can share their earnings with shareholders

Think of it as a reward for investing in the company

Dividends are usually paid out quarterly, but there are some cases where they're paid monthly/yearly

2.

Dividends tend to be paid out by established companies with predictable profits

Meaning you likely won't get a dividend from Zoom anytime soon

These sectors pay out the most dividends:

- Financials
- Basic Materials
- Energy
- Healthcare
- Utilities

3.

So where can you get dividends?

Some of your options include:

- Index funds (a basket of stocks)
- Individual stocks (AT&T, Verizon, Johnson & Johnson, etc)

Each comes with their own benefits and risks so choose what fits your investing style best

4.

Since you're trying to live off dividends

You need to know a starting income you'd like to make

Say you want to live off of $50,000/yr on ETF $VYM which pays a 3.75% yield

You'd then divide 50,000/0.0375

Meaning you'd need $1,333,333 invested in $VYM

5.

Investing in individual stocks has it's risks (dividend being cut) but you can raise your yield higher

Say your dividend stock portfolio yields 4.6%

You'd then need $1,086,956 invested to earn $50,000/year

6.

Now don't forget Uncle Sam's share of the pie

There are two types of dividends

- Qualified
-Ordinary

Qualified divs are taxed at a lower rate but must be long term holds

Ordinary divs are like taxed like ordinary income (like your job)

7.

Living off of a dividend income can have it's issues

Some of these are:

- Inflation (no guarantee the dividend beats inflation)
- Can be cut at anytime
- You only get paid once a month/quarter/year

8.

Freedom is the end goal

Reinvest your dividends to buy more shares of the companies you're invested in

Use compound interest to your advantage

Take a look at the picture below

9.

Dividend investing doesn't have to be overwhelming

- Find stocks you like
- Do your research
- Buy
- Reinvest dividends
- Live off dividends in time

Think you can manage?

Thanks for reading!

Knowing this

Are you going to start dividend investing?

Does it seem manageable to reach the income you want?

Let me know if you have any questions

See you on the next one!