Have you ever wondered what it would be like to sit at home and relax while reading a good book, go play some golf or travel about our vast country and get paid to do so?
Have you ever wondered how you can enjoy some of the “good life” living off some checks that arrive regularly into your mailbox or bank account without working?
Well, I have to confess that I don’t know that feeling today but I’m convinced I’m going to someday thanks to investing in established companies across many sectors that have a strong history of paying dividends.
Companies that make profits can do a few things: pay some of those earnings to shareholders (dividends), reinvest earnings and grow the business, pay down debt or buy back company shares so remaining shares can earn higher future profits. Canadian Capitalist reminded us about this some weeks ago – and you know he’s right.
Dividends aren’t the be all and end all but geez, they are pretty amazing for investors.
As a dividend-investor, I must never lose sight of the risks direct stock ownership means. Apple was close to a dud 10-years ago and some experts wrote-off that company. I guess they were wrong. Apple is now a media and investor darling. Nortel, well, you know the story. There are certainly risks to be had as a dividend-investor, more so than an indexer.
However the more I re-read some of my favourite books like The Investment Zoo and The Single Best Investment and visit my favourite blogs each week like Dividend Ninja, Dividend Growth Investor, Dividend Guy, The Wealthy Canadian and Susan Brunner to name a few, the more I realize a diversified set of dividend-paying stocks can be an outstanding investment strategy. Heck, if you have enough stocks like some bloggers have you might not need any other investment strategy because you’re almost indexing.
Last month, I reported companies like Emera (EMA) and Bank of Montreal (BMO) paid us dividends. This month: same scene, different companies thank you very much. We got more commission-free shares over the last month from our friends at Sun Life, Enbridge and H&R REIT. All dividends were reinvested to increase our projected dividend income for the 2011 calendar year to just under $5,100. Slowly but surely, our passive dividend income is rising.
I’m thankful for the way my investments have been behaving because even good to great companies can come and go. I know there are risks with dividend-paying stocks and I know I need to diversify more because trouble can be just around the corner. However, some of the companies we own have paid dividends for 20, 30, 50, 100 or even 150 years. Past performance is never a recipe for the future but sometimes folks history is all we have.
I will never be able to entirely set and forget my dividend-investing approach but I really don’t mind. Dividend investing does take some active work but the dividends don’t, they’re pretty passive, and that’s rather exciting 🙂
Are you a fan of dividend-paying stocks? If so, which ones do you own?
If you don’t own dividend-paying stocks, what are you investing in instead?
Share your comments!