Starting and growing one’s income by dividend investing is a simple process. But is it too easy?
What Does “Too Easy” Mean?
The phrase “too easy” means that some people think the more complicated things are, the more important and significant it must be. “Too easy” means that some people think that simple-sounding means unimportant and useless.
So is dividend investing too simplistic sounding for you?
What is Dividend Investing?
Dividend investing means buying stock in high quality companies that pay dividends.
Which Companies?
Since there are so many companies in the world, how do we know which ones to invest in?
Again, the simple answer here is the best. Let’s look at the companies that appear on many recommendations list by virtue of their quality and by their increasing dividends over the years.
Dividend paying companies have been tracked and scrutinized, and there are now lists of companies based on their dividend longevities. Here are the most common:
Dividend Achievers – companies that have increased their dividends for ten years or more,
Dividend Aristocrats – companies that have increased their dividends for twenty-five years or more (and larger than $3 billion market cap, and are in the S&P 500 index).
Dividend Champions – companies that have increased their dividends for twenty five years or more.
Dividend Kings – companies that have increased their dividends for fifty years or more.
Where To Find These Lists
These lists are commonly available. Use your favorite search engine. You find it immediately.
While it is impossible to know in advance which companies will prosper and which will decline, I’d say it safe to think that a member of these lists is probably in a better position than any particular company that do not make the lists. There are many more factors to consider in addition to list membership, so it is always important to research a company before investing to determine if it meets your individual goals.
How To Do It
Getting started is always the hardest step. FInd a low cost broker. There now are brokers that do not charge commissions to buy or sell online. Set aside some money you do not need and can afford to go without. Start small. Don’t go for the flashiest names. Go for stability and longevity. Companies that rise their dividends over many years are more likely to continue doing so. Let your dividends compound though dividend reinvestment.
How did you come to dividend investing? Let me know here.
The colored lithograph entitled “Enfance de Napoléon” (Childhood of Napoleon), was created in 1822 by Horace Vernet after Charles-Etienne-Pierre Motte, depicting a likely apocryphal story about young Napoleon organizing and commanding a snowball fight. Courtesy Le musée national de l’Éducation (National Educational Museum), in Rouen, France.
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