Investing in dividend stocks can be a lot like fishing.
You put the worm on the hook, cast out the line and, well, wait.
In investing, particularly dividend-growth investing, the worm is your hard-earned money. You cast it out into the stock market, investing in a company with a sustainable and growing dividend, and wait until you catch something.
Today, I caught my first fish.
It wasn’t a whopper by any stretch of the imagination, just $1.99 for the 3.25 shares of SCHD I had on the ex-dividend date, but it’s definitely photo-worthy:
The first … and the worst
The best thing about my first dividend payment is, unless something drastic happens — a massive dividend cut or (gulp) outright suspension — it’ll be my worst.
Let’s not think about things like that, though.
That’s exactly why I invest in SCHD (and individual companies with low payout ratios like Microsoft and Costco) in the first place … so I don’t have to lose sleep over cuts or suspensions. I want to create an income stream I can count on … and I want the flow to grow.
That’s where SCHD comes in:
Annualized dividend (TTM): $2.67
Dividend yield: 3.37%
5-year growth rate: 11.80%
Consecutive years of growth: 12
Also, as a dividend-growth ETF with more than 100 dividend-paying companies, a cut or suspension is way less likely than with an individual stock.
As I opportunistically add to this position with my $10 investments, the quarterly dividends I receive will only grow over time.
It’s like my bait is only getting better and better. Each quarter, as long as I do one of two things — reinvest the dividends back into SCHD or add to my position with more of my own money — I’ll catch a bigger fish.
The peanut butter to growth stocks’ jelly
I view SCHD as the perfect complement to growth stocks like the ones I own — Rivian and Robinhood.
It trades growth potential for diversification, which, when you own the individual growth stocks anyway, is a very, very good thing.
On top of that diversification, it gives me limitless growth potential as I have options when it comes to putting the dividend to work. In some quarters, I may reinvest it. Others, I’ll use it to pad my growth positions.
This time, it went straight into my uninvested cash position, where it’ll earn 5.25% APY until I decide to pull it off the sidelines and put it to work. It’s nice to have my money make a little money until the right opportunity rolls around.
Here’s a look at my portfolio as of today.
Are you a market participant?
There are more than a few ways to make money in the stock market, but you can’t take advantage of any of them if you don’t participate. Don’t have much money? Me either. I mean, I’m not investing huge chunks at a time — $10 every day — but it adds up fast. Consistency is key and, if I can build a million-dollar portfolio, anyone else with a phone, internet connection, and a little disposable income can, too.
If you aren’t already, start investing today.
Need a brokerage?
Investing is impossible without a brokerage. If you’re in need, I recommend Robinhood. Sign up with this link and we’ll both get a little something to brighten our financial futures. The best time to start investing was yesterday. Today’s the next best and, well, if you don’t start today I highly encourage you to pencil it in for sometime soon. Your future self will thank you.
Disclaimer: I’m a market participant, not a financial advisor. This is not financial advice … but it could change your life.