Investing in dividend paying stocks is a great way to create a growing passive income stream for your family. In a previous post, we talked about how people are starting to lose some of their retirement benefits like pensions. A pension allowed people to have a monthly paycheck when they retired that was guaranteed throughout retirement. These benefits are under fire, being frozen or even having payments cut after retirement, which in my opinion should not be allowed. Due to these cuts, we started looking to other options to create income for ourselves. We looked at buying rental property, but that was a little more time consuming than we wanted. The next option we looked at was investing in dividend paying stocks, which so far has been good for us. We have been investing in these types of stocks for about 3 years now and last year we were able to earn over $2,300.
I once read an article about dividend growth investing which used an analogy to describe the process. Starting an account investing in dividend growth stocks is like planting a fruit tree. When you diversify and buy different stocks it is like the tree is growing more branches. Each branch produces fruit every year just like each stock produces a dividend every month or quarter. As the companies grow, they increase their dividends like when branches grow and are able to produce more fruit. Unfortunately, there are risks that come with investing in stocks, companies can freeze or cut dividends along the way. The key is to create a tree that is large or diverse enough to handle a branch dying or a dividend being cut. These type of stocks you can hold onto for years and years and they can keep paying you along the way. I'm not sure of the author of the article I read, but it made total sense that this could be a great option for our family.
We use Share Builder through Capital One to make our stock purchases. Our dividend portfolio contains many everyday names that most of you probably know. Here is a list of some of the companies we currently own:
Coca-Cola
AT & T
Pfizer
International Business Machines (IBM)
Cisco Systems
Johnson & Johnson
Apple
Target
Wells Fargo
British Petroleum (BP)
General Motors (GM)
The best way to predict your future is to create it. - Abraham Lincoln
