Dividend Stocks: What You Need To Know #FreedomFastLane

Capitalism.com with Ryan Daniel Moran

Capitalism.com

Entrepreneurship, Business

4.8 • 802 Ratings

🗓️ 7 June 2019

⏱️ 14 minutes

🔗️ Recording | iTunes | RSS

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Summary

Reinvesting dividends! It sounds boring.

Just wait 'till you see the compounding cash flow numbers on this strategy, you'll understand why it's the only reason Ryan cares about dividend paying stocks at all.

Are you looking for an investment workhorse that will build a nest egg for your future? Pick up a good habit and put 10% of your earnings into this long term strategy.

Key Takeaways

[2:55] Ryan starts off by sharing his personal minimum criteria: a stock that pays a minimum of 4% and has raised its dividend every year for at least 10 years.

[5:35] As an example we'll use AT&T whose stock trades at about 40$ a share.

Let's buy a hypothetical 300$ worth at a 6% dividend a year for a measly 18$ a year.

[7:08] AT&T have raised their dividend for at least 10 years: let's posit a 10% annual raise.

Y1 — 6%

Y2 — 6.6%

Y3 — 7.3%

Y4 — 8%

Y5 — 8.8%

Y6 — 9.8%

Over 10 years these numbers become really interesting.

[9:03] The next step is the dividend reinvestment plan:

Y1 — 10 shares at 6% reinvested

Y2 — 10.5 shares at 6.6% reinvested

Y3 — 11 shares at 7.3% reinvested

Y4 — 12 shares at 8% reinvested

Y5 — You see where Ryan is going with this...

[11:35] There is a double compounding effect over time which means that at some point when you stop reinvesting, you still have cash flow, and you still own the underlying stock which means you can sell it, borrow against it, etc.

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Transcript

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0:00.0	Today, what we're going to break down is the one piece of the dividend strategy that makes this so exciting.
0:07.4	It's the fundamental reason why I care about dividend paying stock at all.
0:13.5	In fact, dividend paying stock are the one investment that I put money into on a month-by-month basis.
0:31.4	Build a business, invest the profits. I'm Ryan Daniel Moran, and this is Freedom Fastlane. What's up everybody? I'm Ryan Daniel Moran from Capitalism.com.
0:42.7	And today we're going to be talking about one of my personal favorite investment strategies.
0:48.1	And we're going to be going into what you need to know about dividend reinvestment plans.
0:54.9	There is something very, very special and strategic when you get this concept,
1:01.6	which makes the returns and the cash flow on this strategy super mega sexy.
1:09.0	All right.
1:09.4	So a lot of people overlook dividends as a means of cash flow
1:14.3	because they don't understand this idea that comes from the strategy,
1:20.3	which is the compounding results of when dividends are reinvested.
1:25.9	So it sounds boring, but when we get into the numbers,
1:29.3	they're really freaking sexy. Now, there are other things that I do in order to raise cash flow
1:36.5	in the short term. Things like private placements or I like real estate investment trusts or buying websites or investing in businesses.
1:49.9	These are all things that are going to be more of a cash flow win in the short term.
1:55.7	And today what we're going to break down is the one piece of the dividend strategy that makes this so exciting.
2:03.2	It's the fundamental reason why I care about dividend paying stock at all.
2:09.3	In fact, dividend paying stock are the one investment that I put money into on a month-by-month basis.
2:16.6	There's very few times where I'm buying a house every month, or I am investing in a new business
2:23.6	every month, or a new website comes up that meets my criteria every month.
2:28.9	But dividends, there is almost always an opportunity for me to park cash on a month by month basis. So a good
	...

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