I like to think of myself as a dividend investor. I have to admit that I prefer stocks that pay dividends and I always check to see what the dividends are before I make my final decision on buying a stock. It’s not a deciding factor, because I own several stocks that don’t pay a dividend, but it does weigh in on the decision.
My Strategy
Generally I hear about a possible stock through any of the things I read or videos that I watch. However, it is easy to get caught up by the hype of certain stocks. It’s not an ideal way to make decisions though. I just use that method to find companies that might be worth it. Sometimes it’s just seeing what products I use around my house. For instance, I looked at my toothpaste and saw it was made by Proctor and Gamble. My Listerine mouthwash is made by Kenvue.
Once I find out about a stock that’s available, I look at a number of factors, mostly in my feelings. I start off with the price. Can I afford it? I don’t have unlimited funds and try to keep my purchases low, so I’m not blowing a lot of money if things go south. Then I start asking questions about the company. What products do they have? Do I use them myself? Is there a good market for the products. Have they been adding new products?
Then I start looking at the company itself. What other companies do they compare to. Have they been around for a while. Do they have revenue? Are they making a profit? What are the analysts saying about it? What is the P/E ratio? I look at the chart to see past performance. Has the stock been going up? or Down? Finally, I check to see if they pay a dividend. I also check the dividend Ex Date. How long do I have to decide in order to get the dividend on the next go around? I have in some cases bought right away because the Ex Date was at the end of the week. I usually regret that, but there it is.
If I see a company that has a low price, revenue but no profit, I consider them to be a speculative stock. That may not be other people’s definition, but it’s mine. I have a few of them. They don’t pay dividends (obviously) but if I think they have a good product, and I think there is a chance that they will find a market for it, then I consider them. But that’s rare, and some I watch but don’t buy.
Looking backwards
I bought a lot of the technology stocks in the beginning. I had a technology background, so I understood the companies and with Ai coming on strong, it seemed a good place to be. Not so much anymore. Many of them didn’t pay dividends, but they were companies I thought would do well, but only if I could afford them. I had to force myself to diversify and try to ignore my desire to buy all the tech stocks I could. I’m glad I did. I think that checking the dividends is what helped me to diversify my portfolio.
Moving Forward
I am concentrating more on dividends now than ever before. From what I read, I’m not the only one. With the market turn downs, some folks say that dividends are balancing out the losses in value. I was very interested in REITs because of the dividends and have a few of the different kinds. The Real Estate business has been hurting of late, with mortgage rates going up because of the War (or so they say) but they seem to still be somewhat safe. Pharmaceuticals seem to do pretty well and they often pay a pretty decent dividend, and I own a few of them.
It’s not what I thought it would be
I have to admit; I thought I would be able to create a nice passive income by using dividends. But the market is a game of pennies. To make a nice income, you have to have an awful lot of stocks because even the high payers are usually less than a dollar per share (per quarter). Often you would need thousands of shares which means 10s or 100s of thousands of dollars invested. I don’t have that kind of money. I probably make about 300 dollars per year in dividends right now which I am happily re-investing to take advantage of compounding.
If I was doing this at 20 years old, it would be much better for me, but at 70 I just don’t have the time to compound much. Still, it seems like a good way to keep the game I am playing going.
