Already 2016, some might say. I’d argue that it’s never too soon nor too late when it comes to savings. 😉 Truth is, last year was a hard one from a financial aspect. That’s why Mr. My Husband and I decided to make things different for the next year. We’ve set ourselves some challenging goals.
The ideal scenario would be to set up automatic transfers to our RRSP account. However, we’ve also decided to save all extra money weekly to reduce our debts (mainly a credit card and our mortgage). We therefore plan on using our cashback credit card, tax refunds (that should come in a couple of weeks), and my husband’s biannual vacations paychecks. These are not bonuses, but rather a way for employers to put money aside for their employees as it is money taken directly from salary. It’s a well-spread method here for construction workers. All that being said, it demands more organization for us, but we are confident we will be able to make it.
So What’s Up with The Dividends?
Well, some of you might be aware of it, but part of my job is to work with my brother-in-law on his dividend investing blogs. Let me make something clear upfront. When I started working with him back in 2011, I had very little interest in investing and finance. I was a communication/marketing professional. Fun part is my interest grew with my learning!
In the last years, I’ve learned about dividend yield, growth rate, earnings, etc. I’ve seen, read or publish dividend posts, lists, and books. And this is how, slowly but surely, it became clear to me that I had to get in! I had to take advantage of this powerful yet relatively secure type of investment.
Don’t worry! I won’t turn this blog into a dividend investing one! 😉 I don’t think Fabulously Broke’s readers got hooked for that! However, I know that you are interested in money management and investment. That’s why I thought about sharing our new investment process.
Where It All Started
I’m not an advisor or a professional in finance. That’s why I won’t try to convince you of anything. However, I think the following links can really help those of you interested in investing. I’m not getting paid for any of these links. I’ve included them because I’ve personally tried them and thought they’re all worth giving a try.
Back in 2011, I read the first Dividend Investing book of The Dividend Guy Blog. It really helped me learn about the terms and basis on this type of investing. The Dividend Guy also shared his dividend investing code that is worth giving a try!
Then, I started following other blogs for work purposes, but it turned out that it helped on a personal level as well! People like Dividend Mantra, The Dividend Monk and its toolkit and Dividend Growth Investor have helped improve my knowledge and pumped my interest.
It was only last year, though, by working on the new site Dividend Stocks Rock that I really felt I could do it on my own! This site is full of resources: portfolios, newsletter, strategies and principles. With all this in hand, I had no more excuses!
*This site is a membership one, better say it upfront! But I still invite you to look into it.
I started discussing dividends with my husband and we decided it was time to open our online broker account and start our dividend investing journey!
How to Do It?
Because we – Mr. My Husband and I – are new in this venture, we will start quite slowly. We expect to introduce a minimum of 2 dividend stocks in our investment in 2016. Mainly because of fees, and also to have a better impact, we will invest a minimum of $1k for each company. My husband also wants to keep the current RRSP method with his banker for the first year. This is why the number will probably only be around two.
With only two trades, we need to focus on building our core portfolio. That’s why we will be looking for solid companies with an interesting growth potential. I do believe in the 7 Investing Principles of Dividend Stocks Rock. You can learn more about them here. As dividends take time, the years to come will surely help putting these principles to test for us.
What is a solid company? Well, most companies that pay dividends are somewhat solid! 😉 But basically, we’re looking for growth. Growth in sales and in revenue. If a dividend payer is able to maintain or increase its sales and profits, there are great chances it will also be able to maintain or increase its dividends. Mature companies will often fit in that category, especially when trying to build the core of a portfolio.
Let’s take Coca-Cola as an example. I hate soft drinks… but it’s easy to illustrate such a well-known company. Coca-Cola has existed for more than 125 years and sells over 3,500 products around the world, from water to juice and energy drinks. No doubt that the company has been able to increase its sales and profits with new products and new markets, too! Most companies use their profits to pay dividends to shareholders. That’s why each and every year, for 52 consecutive ones, Coca-Cola has increased its dividends!
Why Dividends?
Because dividends come from revenue rather than speculations! You don’t have to follow the market closely to invest in dividends. If you pick your shares in good quality companies, like Coca-Cola, the market won’t have much impact on the dividends paid. Companies will keep on distributing their profits.
What’s even more interesting? You don’t have to be a pro in finance to invest in dividends by yourself. You simply have to follow a good strategy and use appropriate tools to make a good evaluation of a stock. If you understand what the company does and how wealthy it is or not, you understand enough to make a decision.
I’m well aware that some might find all this a little boring. Truth is, I’m really excited about this adding to our finances! I see this introduction into the dividend world as a new way to create wealth without having to actually work. Doing it ourselves saves us a lot of fees, too.
Mr. My Husband works pretty hard for me to work less. If I can add in some to make his life better, there’s no doubt I’ll try!
Are Dividends an Interesting Topic For you? Are You Familiar with this Type of Investment?
Image credit:
What are dividends visual from visual.ly retrieved through Pinterest
It is good news that many companies ‘have cleaned up their act’ and dividends are now increasing which is particularly important as interest rates on savings are so abysmal. I suspect the rate of dividend growth could be a lot better if some companies paid total dividends at least equal to what they pay their staff in bonus. Just goes to show the hard work of the people in constant need of any financial assistance, shame the rewards have only gone to those at the top these past few years. Our recovery would be stronger based if wages had followed pay at the top and less workers would need tax credit.