3X Your Income With My 4 Favorite Dividend Stocks
My 14-year-old daughter has taken it upon herself to help me with my holiday shopping.
She’s been sending me links to everything from clothes to stocking stuffers to electronics that she wants under the tree for herself or her siblings.
This week, she’s been joined by her brothers and sisters too!
At this point I’m getting requests at all hours of the day. It’s like these kids already know that holiday shopping hit a record this year. So now the Scheidt family has to catch up.
The truth is, I’ve already done a good bit of my holiday shopping. I’ve just been careful to intercept the boxes as soon as they’ve been delivered.
More importantly, I’ve been taking advantage of some of the doorbuster sales the stock market has been giving us. And you should be too!
More Profits for Every Dollar Invested
Just like the Black Friday and Cyber Monday retail sales, the stock market has been giving investors some excellent deals this month.
Take a look at what you get when you invest in the market right now!
When you invest in a stock, you own a small piece of the underlying company. That means you’ve got a claim on a piece of the profits that your company earns.
Your portion of the profits are typically calculated as “earnings per share.”
One of the best ways of figuring out what you’re getting for your investment is determining how much you’re paying for every dollar of earnings per share (or EPS). The less you have to pay for your profits, the better the deal for you as an investor.
Today, investors are getting a great Black Friday, Cyber Monday and Happy Holidays deal all rolled into one!
That’s because the average share of stock in the S&P 500 right now is going for just about 15 times earnings. That’s a discount price we haven’t seen since the beginning of 2016!
(By the way, I tweeted this statistic out on Monday morning before the market shot higher. If you want to see what I’m tweeting on a day-to-day basis, check out my twitter feed here and then click “follow” on the top right of the page.)
While I love getting extra earnings for every dollar I invest, this market is giving us an extra perk…
More Income with Less Risk
Another advantage that caught my eye this week is that investors in the market are getting paid more in dividends than you would get from investing in a 10-year Treasury bond.
This is an important point because the media has been trying to tell you that higher interest rates are causing investors to move money out of stocks and into “safe” bonds that are yielding more.
But the truth when it comes to stock investments is that you can actually get paid more, while giving yourself an opportunity to profit from higher stock prices.
(Remember, Treasury bonds are eventually redeemed for a fixed price. So your potential gains are capped and you’ve got risk of bond prices dropping).
The average stock in the S&P 500 pays a 1.96% dividend yield. So for every $100 you invest in the market, you can expect to get $1.96 in annual income.
But keep in mind, this is just an average. And many of the biggest and most popular stocks in the S&P 500 don’t pay a dividend at all!
If you’re currently living off the income you generate from your investments, or if you’re approaching retirement age and you want more income from the stocks you own, you can do much, much better.
Today, with many stock prices trading lower, you can pick up great dividend stocks at cheap prices. Which means you’re getting more annual income for every dollar you spend.
For instance, U.S. automakers have some of the highest yields seen in years. General Motors (GM) pays a 4.04% yield and Ford Motor (F) pays a 6.4% dividend yield. So these stocks give you twice — and even three times — the income you could get from the average U.S. stock.
Real estate companies like Medical Properties Trust (MPW) and National Retail Properties (NNN) can pay even more!
The key is picking out stocks that are trading at fair prices (so you’re not in danger of suffering a major pullback), owning companies that can grow their payouts over time, and of course choosing stocks that give you plenty of income throughout the year.
If you would like to know more about my favorite dividend stocks, and how to pick out the best income plays that follow my three keys to successful income investing, you should check out my dividend newsletter Lifetime Income Report.
In the meantime, now is a great time to take advantage of holiday sale prices in the market, before the bull trend continues to push stocks higher.
Here’s to growing and protecting your wealth!