Do You Like Free Money? (Dividend Stocks)

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Welcome to Season 2 Episode 12 of Not Me, But You! Podcast.

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Do you like "free" money? Then do your own research and then do what wealthy people do- invest in dividend stocks. Buying/holding dividend stocks will produce cash flow. You know, just the pension you may have or wish you had. After all, what is retirement? It's when you have enough cash flow to pay all of your bills and have money left over! Isn't that the place in life, we are all trying to get to? 

Holding dividend stocks that pay you on a schedule is the most passive form of passive income. You simply buy the stock once, and then you get paid! Are dividend stocks risk free? NO! But show me the "unicorn investment" that we are all searching for. Where is the investment that has zero risk and is 100% guaranteed? Answer: It doesn't exist on planet earth! ALL investments carry some form of risk. 

Pay attention to yield(percentage you earn on your money invested) and pay attention to the dividend history. How consistent is the dividend? How often does the dividend change (up or down). Look at the price history of the cost of one share of the dividend stock. 

Dividends are paid to shareholders(you/me who hold shares of the dividend stock) on a schedule- either monthly or ever three months. Cash flow is king! Especially consistent cash flow. 

We cover advantages/disadvantages of buying/holding dividend stocks inside an IRA (individual retirement account) and outside of an IRA. Also we talk about Roth IRA's. But these "special financial containers" have special rules. They have dollar limits that you can deposit into the IRA each year. If we invest in a regular brokerage account (non IRA account) there is NO LIMIT to the amount of money we can invest into dividend stocks. 

I don't ever have my dividends automatically reinvested into the same stock that paid me the dividend. Instead, I opt to have the money deposited into my cash account that is part of the brokerage account or IRA account. Then I have options. I can choose a different stock to invest that dividend money into. I can withdraw the dividend money and get it deposited into my regular checking account. Or I can take the cash from the dividend and go buy "a slice" of growth stock. The "slice" is a portion of whole share of stock. I like having options and choices. 

We must select dividend stocks that pay a yield that is more than the rate of inflation. Personally, I try to make at least 14% on money. If a dividend stock only pays a 3% dividend, then I pass on it. That doesn't meet my requirements to invest. Now I do invest in some growth stocks that also pay a 3% dividend. But I'm getting share price appreciation on the growth stocks AND a very small dividend. See the difference? It matters what our investment goal is. Are you investing for growth or investing for c

I'm not a financial advisor. This podcast is for education/entertainment purposes only. You will need to do your own research and accept responsibility for the results of any money you choose to invest. I love using Schwab.com to buy/sell stocks/ETF's/closed end funds/options. Schwab has a very user friendly app/website and their customer service is excellent. I can easily get to speak to a human being whenever I have questions.