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ChooseFI | Financial Independence Podcast

122 | Should You Invest in Dividend Stocks?

ChooseFI | Financial Independence Podcast

Jonathan Mendonsa & Brad Barrett | Choose FI Media, Inc

Business, Investing, Careers

4.85.2K Ratings

🗓️ 8 April 2019

⏱️ 66 minutes

🧾️ Download transcript

Summary

Craig learned the fundamentals of investing not in a classroom, but during an unpaid internship at Merrill Lynch — a crash course in capital markets that would shape his entire financial philosophy. Now, as his blog name promises, he's racing against the clock to retire before his dad did at 56, using a dividend investing strategy that generates $7,000 in annual income before taxes. Craig shares his journey from aspiring stockbroker to dividend investor, explaining the mechanics of dividend growth investing and how it creates a reliable income stream without depleting principal. Key Topics Discussed: Introduction to Dividend Investing [00:01:40] Overview of dividend investing and its importance for financial independence. Craig's Journey: From Intern to Investor [00:02:00] Craig shares his experience as an unpaid intern at Merrill Lynch and how it shaped his investment philosophy. Understanding the DRIP Program [00:15:38] Explanation of Dividend Reinvestment Plans (DRIPs) and how they work for investors. Difference Between Dividend and Capital Appreciation [00:19:12] Distinguishing between earning through dividends and capital asset growth. The Importance of Dividend Growth [00:27:10] Why sustainable dividend growth is essential for long-term investing. Closing Thoughts and Hot Seat [00:52:06] Craig's key takeaways on dividend investing and personal anecdotes during the hot seat segment. Key Quotes: "Retire free from time and money constraints." [00:55:17] "High expenses can cripple financial plans." [00:59:33] "A life lesson in unexpected blessings." [00:59:12] "Projected earnings from dividends provide security." [00:43:10] "Stable income with minimal risk." [00:43:37] Actionable Information: Research companies before investing to understand their earnings and growth potential [00:35:35] Consider dividend reinvestment plans (DRIPs) for compounding growth [00:15:40] Build a diversified portfolio of dividend growth stocks [00:36:20] Evaluate the payout ratio to assess a company's ability to maintain dividend payments [00:35:08] Set clear investment goals, such as income generation or long-term growth [00:50:03] What is dividend investing? Dividend investing involves purchasing stocks that pay dividends, allowing investors to receive a portion of the company's profits regularly. [00:18:35] How do dividends work? Dividends are payments made by a company to its shareholders, typically on a quarterly basis, reflecting a portion of the company's earnings. [00:19:46] What is a DRIP? A DRIP allows investors to reinvest their dividends back into purchasing more shares of the stock automatically. [00:15:38] Can high dividend yields be risky? Yes, extremely high dividend yields can indicate a struggling company, suggesting potential risks for investors. [00:33:04] Key Terms: Dividend: A portion of a company's earnings distributed to shareholders [00:19:12] Capital Appreciation: Increased value of an asset or investment over time [00:19:12] Dividend Reinvestment Plan (DRIP): A program that allows dividends to be reinvested to purchase additional shares automatically [00:15:40] Payout Ratio: The percentage of earnings paid out as dividends to shareholders [00:35:08] Dividend Aristocrats: S&P 500 companies that have increased their dividends for at least 25 consecutive years [00:36:40] Related Resources: Retire Before Dad Blog [00:51:21] Dividend CCC List [00:37:00] Related Episodes: Episode 075: Investing Basics with Brian [00:17:05] ▶ Listen Next: Ep. 123 — Financial Independence Challenges for Black Americans | Essential Listening

Transcript

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0:00.0

Your listening to Choose FI Radio.

0:09.6

The blueprint for financial independence lives here.

0:20.4

If you're looking to unblocked as secrets to financial independence and early retirement,

0:25.4

you're in the right place.

0:27.2

Stay tuned and join a community of like-minded people who are getting all fans to hear

0:32.0

and taking control of their lives in the pursuit of financial independence.

0:36.3

Choose FI, your home for financial independence online.

0:43.2

Hello and welcome to the show.

0:52.4

On today's podcast, we're going to talk with Craig who writes over at RetireBeforeDad.com

0:56.4

and we're going to do a deep dive or an introduction into the world of dividend investing.

1:01.4

Craig is kind of balanced aligned.

1:02.7

He's an indexer who also has done a significant amount of dividend investing and is leveraging

1:07.8

that plan to meet his stated goal of retiring before dad.

1:11.9

His dad retired at the age of 56 and Craig is on pace to beat him.

1:17.2

What an amazing challenge and I think this is going to be a fun conversation and to help

1:20.1

me with this, I have my co-spread here with me today.

1:22.0

How you doing, buddy?

1:23.0

Hey Jonathan, I'm doing great.

1:24.6

Yeah, it's what an interesting blog name, right?

1:27.2

Retire Before Dad.

1:28.4

I've always wondered, actually, I've known Craig for a couple of years now.

1:31.0

We met it, I think three or four Fincons ago.

...

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