How Much $ You Need To Live Off Dividends (FOREVER)

Here is how much you need invested to live FOREVER off the dividends – Enjoy! Add me on Instagram: GPStephan | Paid Sponsorship From Public: Receive a Free Stock Valued Up To $300 when you open an account and make a deposit! Go to http://public.com/graham and use code GRAHAM

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THE GUIDE TO DIVIDENDS:

Anytime you buy a stock, that entitles you to a small portion of that company’s profits – and, sometimes, those profits are distributed to you on a regular basis in the form of a dividend.

PROS:
-They’re somewhat insulated from the stock market.
For the most part, you know that you’ll get a predictable dividend payment – regardless of what happens with the market.

-Dividend Payments have also been less volatile than stock prices.
For example, the Simply Safe Dividends blog found that – from 1900 through 2018 – dividend payments remained fairly constant, with an average variance of +/- 10% during market downturns.

-Throughout Recessions – Dividend payments sometimes increase.
As Simply Safe Dividends points out, “in three of the above recessions…dividends paid to investors actually increased, including a 46% jump during the first recession following WW II.”

-Dividend stocks have been shown to provide a comparable return to the overall market.

https://www.hartfordfunds.com/dam/en/docs/pub/whitepapers/WP106.pdf


In fact, Fidelity found that dividends accounted for 54% of market returns during times when inflation was above 5%.

CONS:
-Dividends ARE NOT guaranteed.
Even though companies generally try to avoid cutting or reducing dividend payments, this does happen, and because dividends are often a reflection of a company’s profits, in the event of a downturn, they may chose to pause distributions until conditions improve.

-Dividend payouts mean nothing when the company itself declines in value.
In this case, earning 5% annually might actually LOSE YOU MONEY when the stock itself declines 30%.

-There can be tax disadvantages.
Unlike buying a stock and only paying tax when you sell, Dividends are taxed the moment you receive them – and, depending on your tax bracket, it could be as high as 20%, or more.

-Dividends could flat-out be “irrelevant.”
In this case, two well-known economists argued that – if an investor needs money – all they really need to do is sell the stock – and that, dividends don’t actually create any more value for the company itself.

From my perspective, though – MONEY ISN’T FREE, and even though you’re getting paid a dividend, that REALLY just comes out of the company’s cashflow that isn’t being re-invested to grow the business.

That’s why I think that the real benefit of “dividends” isn’t so much that they’re a better investment, or – that they’re superior to a stock that DOESN’T pay a dividend – but, instead – they give you the psychological benefit of receiving steady income, without the need to physically sell your shares to collect your money.

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