We all have to start somewhere. While there’s a plethora of resources out there for any interested parties, we’ve compiled here what we feel are the best resources available for someone just starting out on the journey to financial independence via living below your means and dividend growth investing.
Brokerages
We recommend Scottrade as one of my brokerages. I do so because their transaction fees are fair and they have a ton of local offices throughout the US. It’s reassuring to know that if I have a problem, I can visit a local office and talk to a human being. And if it’s after hours, I can call and actually get in touch with someone. I also enjoy their research tools, like access to S&P Capital IQ. They also have a revolutionary service called FRIP, which Jason has spoken highly of in the past.
Tools
We recommend Personal Capital as a portfolio management tool. Its service is completely free unless you decide to sign up for their financial advisor services. But if you’re a DIY investor like myself, then you won’t find a need for that and Personal Capital will be free. It offers a plethora of portfolio management tools and budget software. And its asset allocation visualizations are beautiful. It’s a great service, especially considering it costs $0 to use. You can read my review on this company, if you’re interested. Although I strongly recommend Personal Capital for portfolio management, I find Mint better for budgeting. Mint, like Personal Capital, is free. I personally use both services and find them complementary.
Great Books On Dividend Investing
By Jason Fieber
This book is highly complementary to the blog. And while you don’t need to purchase it to get value out of this site, it’s a great resource that includes some of Jason’s best content laid out in a very cohesive manner that bridges some of the concepts he discusses in his blog posts. There are four distinct sections of the book that cover individual topics like Jason’s background, financial independence as a concept, the dividend growth strategy, and analyzing stocks. At $4.99, I think there’s a lot of value there.
The Ultimate Dividend Playbook: Insight and Independence for Today’s Investor
By Josh Peters
Peters writes in a very easy manner, and this book covers a lot of the basics. He explains why dividends matter, revealing how dividend paying companies tend to deliver superior returns over the long haul. He also talks a little bit about why and how shareholders benefit by receiving dividends, and it’s not just for the income aspect. His ‘Dividend Drill’ focuses on valuation in terms of future expected return (Gordon growth model), the safety of a dividend (how well it’s covered against earnings and cash flow), and the likelihood of the dividend continuing to grow over time (whether or not a company can continue increasing earnings).
The Single Best Investment: Creating Wealth with Dividend Growth
By Lowell Miller
This book is very engaging and entertaining, while also retaining its educational format. Lowell does a great job explaining why dividends, and especially the growth of the dividends, are so important to total returns and why smart investors will ignore the fluctuations of the market. If you’re looking for a “how-to” in setting up your own compounding snowball, this is a great place to start.
By Matt Alden
This is a phenomenal read that covers the basics of businesses, the importance of fresh capital, the impact of dividends on long-term returns and why it’s important to seek out high-quality businesses that distribute them, how to properly analyze/value businesses, and a summary of how and why stocks within different sectors (consumer stocks, industrials, MLPs, REITs, etc.) are valued differently. This book is not only a great resource on dividend growth investing, but also on building wealth in general.
By Benjamin Graham
Although not a dividend specific book, this is probably the greatest book ever written on investing. The main draw to this book, and really the crux of it, is that it covers the psychological warfare that investing can sometimes involve. It covers emotions to the point where Mr. Graham actually refers to the stock market as a whole as a bipolar “Mr. Market” that acts irrationally and emotionally. An intelligent investor takes advantage of these emotional swings. It covers equities as a whole, how and why one should invest, investment theory, achieving a margin of safety, market fluctuations, and valuation methods all in great depth. To do a true review on this book would require multiple blog posts dedicated to nothing but.
By Zach Ramsey and Joseph Houge
We found this very informative and educational. It starts out with many of the basics behind dividends, investing, and the difference between qualified and non-qualified dividends. The book later moves into the different types of dividend stocks an investor can pick from, and how to form and manage your own portfolio of high-quality stocks. A great book for both a novice and more advanced investor looking for ways to build sustainable, passive cash flow through dividend investing.
Personal Finance/Financial Independence Books
By Vicki Robin and Joe Dominguez
If you could only read one book on personal finance this would be our recommendation. It sets all the wheels in motion. If you ever wondered why you’re not happy running non-stop on your little rat wheel, this book explains why in a deft manner. It puts into words what many of us are thinking, while also listing nine steps on how you put core ideas to action.
The Millionaire Next Door: Surprising Secrets Of America’s Wealthy
By Thomas J. Stanley
This book is definitely an entertaining read. While not really revolutionary, it does provide excellent evidence of how wealthy people got to where they are and how they tend to stick to their perch. The next time someone makes fun of you for driving a 10-year-old car even though you have hundreds of thousands of dollars in the bank, point them to this book.
The Snowball: Warren Buffett and the Business of Life
By Alice Schroeder
Last, but certainly not least, we have Warren Buffett’s biography. Buffett worked closely with the author, Alice Schroeder, to recount his life in his own words. We recommend this book to anyone interested in becoming financially independent because the principles that Buffett has lived by are a superb example on how to build real, sustainable wealth.
Important Dividend Investing/Research Links
Dividend Champion/Contender/Challenger List
The ultimate resource. This is a document that compiles data on all US-listed stocks that have raised their respective dividends for at least the last five consecutive years. It’s maintained by the great David Fish. Stocks are categorized by Challengers (5-9 years of dividend growth), Contenders (10-24 years of dividend growth) and Champions (25+ years of dividend growth). Not only does the document contain the names of these companies, but it also includes extremely pertinent information like dividend growth rates, valuation, debt loads, etc. If you think of the stock market like a market full of stocks for sale, this would be my shopping list.
Morningstar is a free service that offers research tools for the enterprising investor. Here you can get a stock quote, look up five years of financial data (including cash flow statements, balance sheets, and income statements), and compare historical valuations.
DTA is a collection of recommendations and articles on high-quality stocks, mostly dividend stocks. Here you’ll find a number of relevant and interesting buy and/or sell recommendations based on current information and analysis. Most of the articles feature professional analysts. Check it out!
I use Google Finance to pull up instant quotes on stocks. It also allows you to get a quick snapshot on any stock that includes the price, valuation (using the TTM P/E ratio), yield, EPS, and any relevant news regarding that stock.
If you need brushing up on basic terminology, this is a great place to do so.
Mike – the blogger behind The Dividend Guy – has created this service to create, track, and manage portfolios, as well as provide ongoing tools and support. There’s a monthly fee involved, but it’s certainly a fraction of what you would pay to have a professional create and manage a portfolio for you.
This stock screener screens from Mr. Fish’s invaluable CCC list so you can easily and quickly find potential investment candidates. It offers you all kinds of screening criteria: P/E, yield, years of dividend growth, market cap, etc. Take it for a spin!
If you’re looking for a forum board to strike up a conversation with like-minded dividend growth investors, this is a nice spot. I occasionally post on there myself, and the atmosphere there is overwhelmingly positive and supportive.
In addition to all of the previous recommendations we also recommend reading the wonderful blogs I have listed on our blogroll. While books and forums are wonderful, you’ll see personal growth and investing decisions rationalized in real time here and elsewhere.
Hi Dividend Mantra,
That is a very good collection on investment resources. I would also add “One Up on Wallstreet” by Peter Lynch, anything about Warren Buffett ( his letters to shareholders and books like The Snowball).
Best Regards,
Dividend Growth Investor
DGI,
Thanks for the great suggestions there. I can’t believe I haven’t already included The Snowball. That was a fantastic book. I especially liked the stuff on Warren’s early life – commuting long distances to work, using a dresser drawer for a crib, avoiding dry cleaning to save money, etc. Great stuff. His frugality is pretty legendary, but the book gives you a real appreciation for his strategy. It’s certainly something I’m doing my best to emulate, but on a MUCH smaller scale. 🙂
I’ll definitely have to add that one. One of my favorites.
Best wishes!
Hi, I recently stumbled across your blog and have been really impressed with your journey and looking to try and build a dividend portfolio just like you did. I am sure I will be a regular visitor to your blog going forward.
I have a quick question. Do you reinvest your dividends through DRIP or reinvest them manually after you accumulate a sizable amount?
San,
Thanks for stopping by! Glad you found the blog, and I appreciate your readership.
Per your question, I reinvest dividends selectively instead of DRIPing them. I combine a month’s worth of dividends with capital saved from my day job and make monthly purchases from there. I wrote an article on why I do this a while back, but that was before my blog was quite so large. I plan to revisit this topic again very soon, perhaps as early as this coming week. Stay tuned!
Cheers.
Jason,
Odd, a few minutes ago I was thinking about div. reinvestment, particularly your method and why that works for you, but perhaps not for others. So, BOOM, here I see you are going to address that. I hope you cover both sides in your blog, it’s important that some new investors realize your method may not be the best approach for them because of trading fees. Life’s money is fascinating when you begin to look at the big picture and the infinite number of different ways to save, make, lose and squander your life’s money.
Keep doing what you do, I love to watch your journey and learning from you.
Jim
Jason,
You are a very inspiring guy!
Out of the list of books above, what would you consider the top three must haves for noobs?
Thanks.
Jim,
Thanks for the kind words!
I plan to publish the dividend reinvestment article this coming week, so look out for it.
I do cover both sides of it, and the benefits/drawbacks for both automatic reinvestment vs. selective reinvestment. For me, fees have never been an issue because I’m regularly investing anyway. For someone who might only be able to invest fresh capital a few times per year, however, might benefit more by a DRIP.
Cheers!
DixieWrecked,
If I had to recommend just three books they would be the following:
“Your Money Or Your Life”
“The Intelligent Investor”
“The Dividend Toolkit”
I think “The Single Best Investment” and “The Dividend Playbook” are also worthy candidates.
I’m so glad you find inspiration here! I hope to continue sharing and inspiring for years to come.
Stay in touch!
Best wishes.
I super appreciate this list of resources. I’ve been going through all your posts since i discovered your blog two weeks ago and I also really appreciate your interaction with readers, answering questions and commenting. I’m really glad to have found your wealth of information and be able to follow your journey. It’s really inspiring.
dee,
I’m so glad you’ve found this page helpful. I remember feeling really overwhelmed when I first started. It’s tough to know where to start. I think this list boils down the more important resources. 🙂
Thanks for stopping by!
Best wishes.
Jason,
I just started reading your blog a few days ago and have been completely inspired. I feel I have read it exclusively since I came across it. Could you recomend a basic tool to be used for tracking investments/dividends for the technology challenged? I have come across a few thru my research but have become a bit overwhelmed. Any feedback would be greatly appreciated.
Thanks for sharing your journey!
Best,
Newly Inspired
Newly Inspired,
So glad you found the blog! And based on your name there, it sounds like you’re inspired to radically change your life. I wish you the best!
As far as tracking investments and dividends, I’ll share what I use.
I use Mint.com to keep track of my monthly dividend totals, and historical totals.
I use Seeking Alpha to track my portfolio, declared dividends, and news/articles pertaining to the companies I own and track.
And I also use Google Drive for my spreadsheets.
I hope that helps. Stay in touch and keep us updated on your progress!
Best wishes.
Awesome Blog. Found it a few months. Been reading through it all and learning lots. Thanks for all the effort.
Is there a spreadsheet on Google docs that you recommend for tracking a portfolio?
thanks,
Rob
Rob,
Glad you found the blog! I hope you enjoy the content. I really try to put out great articles, and if I wouldn’t enjoy reading it then I don’t write it.
I just use a regular Google Drive spreadsheet and update my portfolio once per month. Otherwise, I track my positions via my brokerage (Scottrade) and I also receive email alerts anytime there is an update with a company.
I know many investors have big, complicated spreadsheets, but I find it unnecessary.
I hope that helps!
Best regards.
Sounds good. Google drive will work for me. I don’t need anything fancy. Thanks for the info.
Do you ever purchase additional stock with companies you already have, in order to lower your cost basis? Also, on your original purchase of a company do you watch to buy on dips, or is it irrevelant to your what price your purchase a company stock for? I need to get most of my cash invested, but wavering as to when to get in…….specific companies i am considering……..thanks
late bloomer,
I average down often when a stock I purchase declines in price soon after the purchase. TGT and DLR are some notable examples where I made multiple purchases on the way down.
I look at it this way: If I liked Company ABC at $50, I must love it at $40.
And price is not equal to value. I’ll buy on dips only if the value is there.
I hope this helps!
Best wishes.
very helpful…………thanks!
It seems like you have a lot of nice resources for the novice and intermediate investors.
It would be nice if you differentiated which sites are paid advertisements and which are your own actual recommendations.
Le,
These are all actual recommendations. As I pointed out at the top of the page, I’ve personally used all of them. I don’t recommend something if I don’t personally find value in it.
Furthermore, none are “paid advertisements”. As I mention at the bottom of the page, they’re affiliate links. Meaning I may make a small commission if you purchase one of these products, but that comes at no additional cost to you. I offer all of my posts and information for free, and I don’t think it’s too much to make a very small commission off of recommendations I personally find value in, especially when it comes at no additional cost to you.
Furthermore, I make less than $50/month from these affiliate links right now.
Cheers!
First comment here! I’ve been reading your blog for over a month now and you’ve been able to show me how powerful dividend growth investing is. I love all of your posts and I think its great that you put so much effort into helping out those of us that aren’t familiar with investing yet. I’m 21 and I just started my investing in high quality dividend companies so I have quite a bit of time to get my (as you like to call it) “snowball” rolling. Thanks for all of the resources and welcome another reader to dividend growth investing!
Dividend Workers,
Welcome to the exciting world of dividend growth investing!
The fantastic thing is that you’re getting your snowball rolling so early in life. Your hill is about as steep and long as it can possibly get. So even minor contributions, if maintained, will have a major impact on your future finances. Great job!
Glad you found the blog. And I appreciate the support very much. It’s an honor for me to be a part of the community. 🙂
Best of luck with both investing and your new blog.
Cheers!
Jason-
I continue combing through your site, and find different nuggets of assistance, thank you.
I have several of the aforementioned books, and am reading my way through them (plus some others from MMM, ERE, etc) in my quest to get my dividend investing portfolio off the ground.
I am finding that the Lowell Miller book seem(s) to be fairly helpful in the “How” to go about assessing possible dividend stocks for long-term holdings, however I do get bogged-down in the technical aspect(s) of assessment.
My dilemma is this: I have a chunk of money (~$25K) – doing NOTHING for me – in a brokerage MMA account. I would like to start building the SBI cash flow machine, but am not sure of ‘what’ to start buying.
Do I go out and buy a grip of long-term dividend champions? Do I hold-off until the next big adjustment?
I am not sure, but am concerned that whatever I do, will be the WRONG move as it pertains to dividends.
Your input would be appreciated.
Thank You,
Todd
Todd,
Thanks for stopping by and commenting! Glad you’ve found some helpful information on the site. 🙂
As far as your dilemma is concerned, like anything else in life there’s a learning curve to all of this. I’ve learned a lot as I’ve grown as an investor, and I’ll continue to learn as I go. I’ve made mistakes, and I’ll make many more before I’m done. So there’s a little trial by fire with this, just like with anything else in life. You can read all day long, but real-life experience is much more valuable.
That being said, I wouldn’t invest all of that capital in one chunk. I would formulate a long-term capital allocation strategy based on how much money you think you can save per month. So if you think you’ll be able to invest, say, $2,000 or so per month, then I would start right away with investing that $2k per month. That means you’d allocate that capital over the course of the next year and average your way into the market.
You’ll have to get comfortable in your own skin, and that takes time as an investor. Valuing stocks is part art and science, and it’s not exact. However, I did write a little about valuing stocks here:
http://www.dividendmantra.com/2014/01/how-i-analyze-and-value-stocks/
I hope this helps! 🙂
Cheers.
I stumbled upon your site and liked your story and goal objective. I am searching for an investment vehicle and DGI seems to fit my investment personality. After reviewing the suggested books and blog sites, what is the first book you would recommend to someone brand new to DGI to get them started?
Thanks and continued success on your journey,
Maureen
Maureen,
Glad you found my humble spot on the internet. And I’m even more glad that you are starting down your own journey to financial success. 🙂
It’s tough to narrow it down to just one book. The first three books on this page are all worthy candidates for a great first read.
I suppose Miller’s “The Single Greatest Investment” is good for someone just starting out, as it really lays out the basics. But Peters’s and Alden’s books are also both fantastic.
I wish you the best of luck! And please stay in touch.
Cheers.
Thanks, I will get all three and keep in touch.
Maureen
Do you ever time dividend payouts by entering using Exdate and selling after Paydate ? Do you have a dividend percentage you expect to make on the stocks you buy ?
Peter,
I don’t follow such a strategy. I looked into it many years ago and I determined that there was no arbitrage to expose there. It didn’t seem like a very viable/successful strategy to me. But you may find otherwise.
As far as yield goes, I generally try to buy stocks with a yield of at least 2%. But I’ve been more relaxed on that as my portfolio has grown. When I first started I was more interested in 4% yield, and generally tried to avoid anything with a yield below 2.5%. But I was trying to get my snowball rolling from a standing start. Valuations have risen in the last few years, bringing yields down. On top of that, I’ve become more interested in stocks that can grow faster, propelling my dividend growth for decades to come. But I still try to stick with at least 2%, making rare exceptions.
Cheers!
Hi DM,
I’ve been looking at online brokers and I think I am going to open an account with Scottrade. I notice that they have a promo right now where if you are referred, both of us would get 3 free trades.
I haven’t been able to locate a referral code on your site. Do you have one to give?
Many thanks and I have already learned allot from your posts!
Dividend Newbie,
I’d be happy to share a referral code with you that will give us both three free trades.
You can email me at: dividendmantra@yahoo.com. Of if you’d prefer, I can email you. Just let me know your email address.
Best regards!
I really enjoy your site. I found you through the Mr Money Mustache article you did. I really love your site. I’m trying to pull out of student loan debt my wife and I have first, and then start a faster path towards early financial freedom. I just started using Computershare for PG and COP stock to have a slow start to investing every month. We are using about 70% of our wages for the debt so in 2017 we will in much better place. Have you read Common Sense on Mutual Funds by John Bogle? I’m finding it a fantastic read so far, and much of the information can apply to dividend investing also. I’m considering doing a stock and index fund split to meet our goals. Thanks for the site and information.
Coytirement,
Glad you stumbled upon the blog! I still remember that guest post fondly. Certainly generated a lot of commentary. 🙂
Sounds like you’re doing the right thing there. I didn’t have a lot of debt when I first started, but I made a bold move to get rid of a car loan by selling the car and living without a car for some time. I now have some student loan debt, but it’s at a rather low interest rate that’s tax-deductible. But you’re definitely making the right move there.
I haven’t run into that book, to be honest. But I happen to think pretty highly of Bogle. I’m currently re-reading “The Snowball”, but perhaps when I’m done with that monstrosity I’ll see if I can check that book out. Thanks for the suggestion! 🙂
I hope you poke around and find some value here on the site.
Cheers!
Hey Jason,
I’ve just started my dividend income, I was wondering why you didn’t have CAT or OSK. These tend to pull big Government contracts. I don’t know if you stated but have you heard of the company perks like the ford x discount for owning a 100 shares, among other companies.
Great website by the way it’s putting me in the right direction.
Erik,
Glad you’re enjoying the blog! 🙂
OSK isn’t a dividend growth stock. CAT, however, is. I may invest at some point. They’re seeing a lot of competition in Asia, but they still have a solid product and brand. It is a cyclical company, though, and I’m trying to avoid too much exposure to cyclical companies like CAT. Overall, it’s a solid company.
I actually wasn’t aware of the X-Plan. Very cool, though. I’ve heard of discounts like that before with other stocks. I know Berkshire shareholders are offered discounts off of Geico insurance, which could be pretty useful. I’m sure there are other programs out there.
Best regards!
Congrad’s,,, I am a believer in continual long term investments with growth companies and substantial dividends. As years go bye the numbers get bigger.. After 35 years with modest income investment for only 21 of those years, my net investment value is approx. $265K, that provides over $100-125K annual dividends just for the last 12 year alone, as the payback. And the equity/growth value have increases from one (1) million U.S. dinars to over $4.5 million since 2001, through those lean years of 2006 to 2014.
Dave,
Over $100k/yr in dividends? Sounds like you’re rolling along pretty good over there. I’d be financially independent five times over on that. Enjoy the fruits of your labor. You deserve it. 🙂
Thanks for dropping by!
Take care.
I would also recommend “Cashing in on the American Dream – How to Retire at 35” by Paul Terhorst. It is out of print as he retired in the early 1980s, but can be found in libraries or online. Nothing to do with dividend investing, but good insight into the process of adjusting to early retirement. He and his wife have been retired for 30 years now, so it is a good long term example of FI success.
HollyG,
I actually ran into an article not long ago (and linked to it here on the blog) that caught up with him and his wife not too long ago. They’re still on the road and enjoying life. They took a different approach to things than I am, but just goes to show that there are many ways to do this. Haven’t read the book yet, so I can’t freely recommend it. But I’ll try to pick up a copy and give it a read. Thanks for the suggestion! 🙂
Best regards.
Read several of your articles and just want to say to keep up the aggressive saving and investing. I did since I got out of college and at 46 stepped out of the full time workforce. Now at 47 I cut down to 2 days or less per week. The key is living under your means and investing in a diversified portfolio. I think cash flow is very important. I have 2 rental properties and a portfolio of both taxable accounts and IRAs. Remember to to utilize the match from your employer and the tax benefits of IRAs (Roth or Traditional) depending on your tax bracket. I didn’t invest in many bonds in the accumulation stage. Now that I stepped back from work I have a balanced portfolio. I just want to strongly say that the good markets you been investing in wouldn’t continue forever and there will be major setbacks possible in the future. You will be happy down the road when your working on your own terms. i think it’s great that some young people are not spending themselves into workplace slavery. Keep up the good work from someone who started with the same ideas before internet blogs that spread ideas to many more people.
Matt,
That’s a great story there. Congrats on working hard and reaping the rewards of such. Being able to drop down to part-time work in your late 40s is an incredible gift few people can take advantage of.
I don’t find fixed income very attractive right now, but I wouldn’t mind some exposure there when rates are more attractive. I just don’t see the benefit right now, especially since I don’t mind volatility.
“I just want to strongly say that the good markets you been investing in wouldn’t continue forever and there will be major setbacks possible in the future.”
I can only hope you’re right about that. I’d LOVE to be able to buy cheaper stocks. Those who claim I wouldn’t be as successful had the stock market not run up so much over the last few years obviously aren’t aware of the inverse relationship between price and yield…or value and risk. If the S&P 500 were still at, say, 1,700 points my dividend income would be a lot higher than it currently is, and I’d be a lot closer to financial independence. But we roll with the punches, right? 🙂
Thanks for dropping by and sharing!
Best regards.
Is there any reason why you use Scottrade? They charge $7 per trade and TradeKing charges $4.95 per trade. I’m trying to weigh my options.
Sam,
Well, I laid out the reasoning above. But if you feel more comfortable with TradeKing, then by all means you’re probably just fine over there. That said, $2 per trade probably won’t make much of of a difference over the long haul since we’re talking about two trades or so per month on average, or something like $50/year. If that makes or breaks you, then you’re doing it wrong. 🙂
Cheers!
Thanks DM! I have another question for you. Would you recommend trading dividend stocks in a retirement or non-retirement account? Currently I only have a Roth IRA. I’m looking into opening a SEP IRA soon.
Sam,
I recommend maxing out tax-advantaged accounts for most people. There are a lot of advantages there that shouldn’t be passed up for most people. I find the Roth to be one of the most flexible of them all.
That said, I use only a taxable account for some reasons I’ve laid out before:
http://www.dividendmantra.com/2013/08/why-i-hold-100-of-my-equity-investments/
But my situation is a bit unique. For most people, I definitely recommend taking advantage of the retirement accounts when and where possible. 🙂
Best regards!
Amazing! Inspiring am lost for words.
Blessed,
Thanks so much. I’m glad you’ve felt the inspiration. That’s exactly what I aim for. 🙂
Cheers!
Hi Jason,
I read your articles regularly on Daily Trade Alert and you’ve taught me a lot. At the moment I’m trying to give my 22-year-old a good push into regular investing, by opening a Roth IRA for her birthday. I don’t have much to get her started, but I was hoping you could recommend perhaps 3 stocks to be the bedrock of this account for now?
Kelly,
Thanks for the readership and for following along. Much appreciated! 🙂
I honestly can’t make stock recommendations for anyone, however. There are legal and logistical difficulties to doing that, as it’s impossible for me outside of some kind of financial advisory role to really make recommendations. For instance, I haven no idea as to your daughter’s risk tolerance, time horizon, or really anything at all. So it just wouldn’t be appropriate for me to name off stocks that may or may not make sense for her.
But you can look at all of my recent transactions for those stocks that I’m buying and personally believe in.
Best wishes!
Thanks for getting back to me, Jason! I should have realized all that–I guess I’m just comfortable enough making these decisions for myself, and I need to be more confident to guide my daughter well. Anyway, I think your story and your work can really help young people who are so stressed about becoming financially independent adults. If I’d only known 30 years ago how powerful the dividend effect is…
Hello Jason,
I am a new entry here. I was trying to post (basically a question) with couple of paragraphs, but everytime I hit the submit button, it is saying page not found. Are there any characters or symbols that are not allowed?
Thanks.
Paul
Paul,
Hmm, I’m not sure to be honest. The commenting system seems to be okay on my end. Perhaps you can try again or submit a contact form. My apologies!
Cheers.
Hello Jason,
Firstly, I wanted to say that reading your articles and the diligence with which you are passionately pursuing your goals is simply inspiring. I am a beginner at this, but your dedication and enthusiasm is actually enabling me to take the first step towards pursuing my own goals of having a passive income stream. Thank you for your work.
I am ready to open an account and with $3,000 or more, and planning to contribute a thousand or so every month. To that end I’ve started educating myself (from your blog) and books, and soon will be putting together a small portfolio. Just have a few questions and I would like your feedback and insight if possible:
1. For Coca-Cola stock I am looking at their current P/E ratio of 25.6, seems to be little over the 20 that is being recommended. Should I be steering away from this, even though I hear nothing but solid backgrounds for this, just because it is failing the P/E test?
2. Same for O (Realty Income Corp), this has a very high PE of 48.61. It seems to fail this test. But I understand based on my research this is a great one to have. Or for REITs is there a different P/E ratio?
3. Is there a preferred time to buy stocks in a month, or is it generally ok to buy anytime?
4. Any tools you suggest as far as evaluating, monitoring to ensure any rebalancing can be made if needed.
Thanks so much.
Paul
Paul,
So glad to read that you’ve taken that first step. That’s fantastic. The first step is definitely the hardest. It gets easier once you’re rolling, especially once you get compounding working for you. 🙂
I’ll do my best to answer your questions:
1. A P/E ratio of almost 26 is quite high, even for a stock like KO that often is priced at a premium (its five-year average P/E ratio is almost 19). Furthermore, KO isn’t growing fast enough to warrant a P/E ratio that high. However, the P/E ratio shouldn’t be the only metric you look at. It’s only useful insofar as it’s accurate. Keep in mind that the E in the P/E ratio isn’t always reflective of a company’s true earnings power, as earnings per share can be affected by short-term issues. So that’s something to be mindful of. I personally like to look at the P/E ratio and compare that against the historical average, but also trying to figure out if there’s an anomaly there. I also use the dividend discount model analysis to actually value stocks, like you’ll see in my analyses.
2. This is another example of the P/E ratio’s limited usefulness. REITs shouldn’t be judged by their P/E ratio, but instead by FFO (funds from operations) or AFFO (adjusted) on a per-share basis. This article explains more: http://www.investinganswers.com/financial-dictionary/financial-statement-analysis/funds-operations-ffo-813
3. Not really. I wouldn’t recommend timing your purchases, as you’ll find it really can’t be done. The only thing to maybe look out for is a stock’s ex-dividend date. If you want to collect the next scheduled dividend from any stock, you’ll have to own or buy that respective stock at least one business day before the ex-dividend date. You can find that date on almost any financial site or at a company’s investor relations site.
4. Personal Capital (which you can find above or on the sidebar) is pretty solid for asset/sector allocation, which gives you an idea where you stand and whether or not you think you want to rebalance. I’m personally almost 100% stocks (besides some cash I keep aside for emergencies), but fairly well diversified across the sectors.
Hope that helps. 🙂
Best wishes.
Thanks so much for your detailed feedback, Jason. I am going over the info. and the tools you have suggested. I am always learning every time I read your posts. You are invaluable.
My best to you!
Paul
so I found your blog, guided here by the also great budgetsaresexy.com, and as someone looking to get their toes wet in the world of investing, having done a fair bit of reading I think that the dividend-centric strategy is the one for me. I still haven’t purchased anything yet, though I was considering about working through motifinvesting.com, so far I’ve read good things, but I was curious what your opinions were on it.
Also, purely out of curiosity, how did you get your start? Sorry if you already answered that question, I’ve been working my way through parts of your blog and haven’t caught it yet if you have. How much money was your initial investment? how much were you putting away per month? Currently I’m 23, and have 5,000 I’m comfortable testing the waters with for now.
wayward,
Glad you found the blog! 🙂
You can read a bit more about my story (and how I got here) via the following articles:
http://www.dividendmantra.com/about-me/
http://www.dividendmantra.com/2013/03/dgi-case-study-5k-to-100k-in-three-years/
http://www.dividendmantra.com/2014/05/if-i-were-starting-all-over-again/
But I started off with $5,000 back in early 2010, which is exactly where you’re at. Except you’re a lot younger than I was back then. So not only can you see what’s possible in a relatively short period of time, but you’re in an even better position than I was. Awesome!
As far as Motif, I’m not a real big fan. The cost structure isn’t a whole lot better than most other major brokerages out there unless you’re buying a huge swath of stocks at a time. And unless you can somehow quickly perform in-depth analyses on 20 or 30 stocks at one time, that’s just not the right way to think about buying stocks and building a portfolio out. The costs to buy/sell stocks from your “motif” are similar to other brokerages like TradeKing (which is one of the brokerages I use). Motif seems kinda gimmicky to me. Just my opinion on it.
You can read about TradeKing here, if you’re interested:
http://www.dividendmantra.com/2015/04/tradeking-brokerage-review/
Hope that helps!
Best regards.
Wow! You only started with 5K? That’s amazing, and with that you have 100% convinced me. Also I really appreciate your input on motif, it’s appealing to a newbie like me to see everything put together in a nice friendly face, but I had a few reservations and you’re not the first one that’s had less than stellar reviews of it. I really appreciate you getting back to me, and it’s nice to see that you take the time to respond to everyone. You’ve made a fan, and I’ll definitely be sharing your blog in the future.
Thanks a ton.
Hi Jason,
Fantastic read mate. I came across your blog a few weeks back and have spent hours on it to date.
My own bit of background: turned 32 in January this year, spent the month out of work with appendicitis and had a LOT of time to think about where I was in life. Decided I needed to get my act together and get educated. I could have spent the month on the Playstation, but thankfully instead read a few motivating starter books like Rich Dad Poor Dad, and The Richest Man in Babylon. I would have enjoyed my middle class income through my entire 20s, but with little or nothing to show. At the time the only debt in Jan was €2k on a credit card which I cleared by Feb. I’ve been trying to build a pot with a minimum of €1k each month.
I really like the idea of DGI. I was wondering……have many Irish people been in touch with you in terms of them approaching a DGI lifestyle? I’m just getting started and made my first purchase last month, but I’d love to see/hear from Euro/Irish based dividend investors. We have a nasty enough income tax on dividends here that make the returns considerably smaller in comparison to your nice tax situation in Florida!
John
John,
Thanks for reading along. Much appreciated! 🙂
Glad to read that you’re turning things around over there. It’s always fun to kind of have that epiphany and realize that things have to change. When you’re first starting out, every step seems like a mile. A lot of progress to still be made.
I can’t say I can think of any regular readers off the top of my head from Ireland, but I do have regular visits from Ireland (the stats show me which country visitors are from). So there’s definitely some traffic there. Our dividend taxation is pretty favorable here in the US, though there are a lot of dividend growth investors over there in Europe making great progress and blogging about it. You’ll see some of them on my blogroll, like No More Waffles (based out of Belgium). Anything is possible when you put your mind to it.
Stay in touch!
Best wishes.
Hi Jason! Hope you are well.
I’m just starting out (I’m British from the UK) and am about to transfer $100,000 to start my portfolio. Do you have any last minute advice or do’s / don’ts that may be valuable?
I have about 20 solid US stocks that I am going to buy into, all in different sectors, and will divide the money so each stock has the same investment…. I hope this should be a good strategy. Looking to buy for 40 years until I retire! 🙂
I’m just a little bit worried about when or if to ever sell…. I know very little about stocks and the markets in general…
Best wishes,
Lee.
Lee,
Thanks for stopping by. I’m incredibly well. And I hope the same for you. Though, with $100k to start with, sounds like life is great! 🙂
” I know very little about stocks and the markets in general…”
“Do you have any last minute advice or do’s / don’ts that may be valuable?”
Absolutely. My advice is to not invest any of the money until that former statement becomes: “I know a lot about stocks and the markets in general. I feel very confident about what to do with my money, where to invest, how to read through financial statements, how to react when the market changes, and how to properly digest news/noise.”
The books I’ve listed above will all help you with that. I made the mistake of jumping the gun when I first started out and, fortunately, I wasn’t burned. But that could have gone the other way on me. I sold out of everything after a little while and didn’t start investing again until I felt reasonably comfortable with what I was doing. You don’t need to be Warren Buffett to invest in stocks (you’ll never be), but you should have a fairly solid idea as to what you’re doing. And, of course, you’ll learn more as you go.
Best of luck!
Cheers.
Thanks for the sound advice, Jason.
I take your point. I may have over-simplified my approach and been modest in my existing knowledge level. I know the things to look for when picking stocks, for example: Payout Ratio, Number of consecutive years of dividend increase etc. I use dividend.com for stock selection – their DARS rating system is very useful.
Can you recommend any books that have a specific focus on understanding financial reports, company analysis, stock analysis etc.? I’m not quite sure what “term” I should be searching for in Amazon to find books on this subject…. I basically want to be able to look at a stock, and understand all the lingo, ratios and figures!!! And also to be able to read a financial report and get a basic idea of where things are going….
Thanks for your time….
Lee
Lee,
I’d really suggest all of the books listed that are focused on investing/dividend investing. So that’s the first six listed. They all contain information you’re looking for. The Intelligent Investor is a lengthy and possibly tough read, but it’s really the greatest book ever written on investing, in my opinion. But the rest are a breeze.
The internet also has a ton of information on stock analysis. I can’t speak to the quality in relation to what’s contained in the books, but it’s out there. If you don’t want to buy any of these books, your local library will surely have at least a couple of them stocked.
Best of luck. Have fun! 🙂
Cheers.
for DGI strategies, to buy good stocks monthly, commission fee is also a concern! have you heard about https://www.interactivebrokers.com/en/home.php
it seems they offer good deal for frequent purchases!
any suggestion for this broker?
leon,
I’m turned off by their pricing structure, which I find needlessly complicated. Simple is better, in my view. And I generally prefer brokerages that have physical branches, when possible. I’ve had a great relationship with Scottrade and can’t recommend them enough. TradeKing has been mediocre for me. I’m likely going to try Fidelity next.
For those buying 1-3 stocks per month and just holding for the long haul, commission fees will likely be a non-issue if you’re making sure the transactions are large enough in size. I’d place commission fees somewhere near the bottom of my list in regards to what’s important to me when considering a brokerage. We’re talking about who’s going to handle thousands or hundreds of thousands of your dollars. If $5 or $7 or whatever makes or breaks you, you’re doing it wrong.
Wish I could help you more with Interactive Brokers. Just not interested in them.
Take care!
Jason,
Great work thus far on saving up on all your investments! I hope to be there soon.
I do have one question – I’m about 40% of where you are in terms of total portfolio value (split into 401k, IRA, IBA and whatnot), and I just turned 24 years old in May. My question is this – in retrospect what would you do differently in terms of your portfolio and how you invest? I do not want to be picky, but I’d appreciate an answer deeper than start to invest earlier or save more because I believe a lot of people would do so if they could.
Thank you,
The Dollar Harvest
TDH,
Thanks so much. Appreciate the support.
Congrats to you for being in such a great spot at 24. Although you didn’t want to hear it, not starting earlier is my biggest regret.
Specific to investments, I’d actually have to say that passing up low-yield stocks that were otherwise high quality is something I strongly regret. Stocks like V, DIS, BDX, and SBUX came across my desk at some point and I passed them all up much earlier on, out of concern of the low yield. I knew the quality was incredibly high and I was enamored with the business models, but the yield held me back. Of course, I had a goal in mind to get my dividend income boosted as fast as possible so as to buy myself as much flexibility ASAP… I knew in the back of my mind I couldn’t make it in the auto industry until I was 40. So I guess I can’t fully regret all of that. But of all the stocks I can think of that I wish I would have bought a lot earlier on, most are those stocks yielding between 0.8% and 2%. I rectified that later on by picking up V and DIS, but there are still a few others that I want to get my hands on.
Knowing how young you are (and how young I still am), I’d say to be careful about passing on an excellent business if the only thing holding you back is a lowish yield. If the company is what you think it is, the growth might just make up for that over the long haul.
Hope that helps!
Cheers.
Jason,
I don’t recall coming across a post that you wrote about Loyal3. Is Loyal3 something you would recommend over say..computershare ? The concept sounds pretty great aside from not necessarily getting the exact price you want every month.
Guy
Guy,
I wrote about Loyal3 a bit when reviewing TradeKing. I don’t really like the idea of the platform. Limited choices, no branches, batch orders, limited customer service hours, and a relatively short operating history all lack appeal for me. If I were someone who were investing much less money per month and/or had limited stocks I were interested in, it might make sense. But I think for anyone who’s interested in actually achieving financial independence at an early age, this platform only makes limited sense… and only then as an ancillary account. If you’re not investing a substantial enough amount of money every month to offset commission fees, then you’re likely not saving/investing enough to get to where you want to be. Said another way, if $5 or $7 or whatever is going to make or break you, you’re doing it wrong. I personally prefer the more established brokerages.
Cheers!
Hi Jason, do you invest in a taxable account? Im curious if you also have a Roth IRA for your investments. Thanks and keep it up. I wrote to you a couple of years ago, I have stick to the dividend investment strategy and can’t complain, I’m already approaching the $100k mark and my dividends are close to 4k a year. Best to you and will keep monitoring you.
Omar,
Thanks for following along. And congrats to you on your success. Six figures and $4,000 in dividend income are mighty achievements! 🙂
As far as your question goes, I invest solely in a taxable account as I discussed on the blog:
http://www.dividendmantra.com/2013/08/why-i-hold-100-of-my-equity-investments/
Best to you as well!
Cheers.
Hi, the link to Perosnal Capital does not work for me, maybe you want to check…
DM I discovered your blog thaks to dividendogma, and now I am a big fan of your “work” and learnig a lot.
I have started in DGI a few months ago, and see how it works for others gives a lot of hope.
BD,
Thanks for advising me on that. I put in a call over to my affiliate partner and they’re apparently having some issue. They think it’ll be cleared up very shortly.
Thanks so much! 🙂
Best regards.
lunesnegro,
Thank you. Glad you found the blog and I’m even more glad that you’re learning a lot and finding some inspiration here.
There’s a lot to learn at the outset, but the knowledge just builds upon itself. It compounds just like money. In addition, it’s just so much fun. So I’m sure you’re just going to love it. 🙂
Have fun over there. And stay in touch. Plenty more to come.
Best wishes.
Hi!
First of all, love your blog. I just recently started the chase for dividends, but I’m slowly getting there 🙂 Since I can’t seem to use Personal Capital (I live in Sweden, and the signup won’t accept my mobile number), do you know of any european equivalent?
Leif,
Thanks so much. Glad you’re enjoying the blog! 🙂
I’m unfortunately not aware of any European equivalents, however. As you can imagine, everything I come across is US-centric. So I’m just not familiar at all with platforms from across the pond. Wish I could help more.
Best regards.
Hi Jason, I follow your blog regularly, and am glad to see your immense progress.
I am at a point where I have about 1500 seed capital to open a portfolio. Do you think this is an adequate launch pad, or will I need more?
Thanks for any input you may have in advance,
Len
optimuslen,
Thanks for following along. Appreciate the readership and support. 🙂
Your capital there is definitely enough to get started. As they say, the best time to start investing was yesterday. $1,500 is enough for a nice-sized stock purchase, which will get your feet wet and get your snowball rolling a little bit. Otherwise, the money is just sitting there and you’re not really moving forward. I started with a little more cash, but I didn’t throw it all in one stock. I spread it out a bit, but the difference between how much I started with ($5,000) and what you’re working with right now is really negligible in the grand scheme of things.
That all said, I’d only get started if you really feel comfortable and have the knowledge necessary to succeed. If you don’t really know what you’re doing, it won’t matter if you’re starting with $1,000 or $100,000. So just make sure you’re at a spot where moving forward is something you’re comfortable with.
Good luck over there!
Cheers.
A very insightful blog!
I was wondering if you had heard of the Robinhood mobile investing app. which has zero commissions on trades? Being that I’m currently in a position where I can only invest a small amount at a time (albeit at regular intervals), the zero commission trades don’t eat into my investment capital. Do you have any thoughts on that approach, as opposed to making larger trades in one go?
Appreciate the feedback and keep up the good work!
-Paul
Good list of investment resources. Thanks!
I was wondering the same thing. I am in my 20s and a new investor (I am Mrs. Dibidend’s wife). I’ve heard of Robinhood but not sure about it…
Dividend Mantra HAS BEEN MY INSPIRATION!!! I have followed jason since the beginning and just recently started dividend investing in my last year of college and am tracking my journey on thedividendkid.com. Hopefully I can someday have the portfolio of Jason, inspire people, and become financially independent, that really excites me!
Jason we all wish you would come back. I even started a blog because of you to track everything. Please do come back.
http://www.dividendmiracle.com