*This is the first ever guest post at Dividend Mantra. A frequent supporter of the site, Pey Shadzi, has written a great article about being a dividend junkie and the benefits of such.
Hey, nice to meet you. My name is Pey. I’m a dividend junkie.
I wasn’t always this way, you know. Just over three years ago — right around the time of my 26th birthday — I sat down at my kitchen table to ponder my financial future. In my opinion, my situation actually wasn’t looking too bad. I had done many things right including paying off my college loans while still in school, working three jobs for pocket cash, building up a sizable cash position to fund graduate school and dutifully paying off my car. I was pretty much flying high and after throwing my hat in the air to celebrate at graduation, I literally had to pat myself on the back for doing everything right.
But then it hit me: My net worth was still technically $0.00, was it not? That’s a bad thing, right? I guess I wasn’t really too sure. Realistically I was only 26 years old. Maybe I was doing well, maybe I wasn’t.
When comparing myself to my friends and classmates, I realized my net worth was proportionately higher but realistically I wasn’t happy with my situation. I began delving deep into the world of personal finance literature, reading nearly every book at my local library and scouring the internet for blogs — much like this one. Having no debt helped out since I was able to use any excess cash available to fund my retirement accounts and build up a core set of dividend-paying stocks. Better yet, securing a well-paying job out of graduate school and being incredibly frugal with my cash allowed for some big advances over the next three years of my life. I worked at a grocery store part time, too, for fresh investment capital. Things were looking up and I had built my net worth from the ground up, all by myself. It felt great.
About a year ago, however, I decided I had a sizable enough net worth of about $65,000 and decided that perhaps it was a good idea to have a professional look over my shoulder. You know, just to give a second opinion. So I made an appointment with a Certified Financial Planner in San Diego. After sitting down and displaying my entire portfolio and investment account balances, I was pleasantly surprised to find out I was “on the right track” and was advised to keep doing what I was doing. I was somewhat disappointed to find out he didn’t even have one suggestion to help better my situation during our meeting. After leaving his office, I had a lingering feeling maybe that $150 I left on the table at the financial planner’s office was poorly spent, but I’d be lying if I said I didn’t sleep much more soundly that night. Perhaps it was really worth it.
One the drive home from his office, however, I faithfully convinced myself that I could go it alone from that point on, vowing never to pay a financial advisor to tell me I was on the right track again. Soaking up every piece of information I could find on saving, frugal living, investing and financial markets had led me down the right path and I began to feel confident that I had the right approach for my risk tolerance and investing abilities. For me, that meant focusing on dividend-paying stocks that dished out impressive cash payments each quarter while continuously increasing earnings per share and boosting dividend payments for many years in a row. I had found my strategy and began to feel comfortable in my abilities to continue to build my net worth on my own.
I purchased shares of Procter & Gamble (PG), Abbott Laboratories (ABT), Johnson & Johnson (JNJ), ConocoPhillips (COP), Kraft (KFT), Dover (DOV) and Exelon (EXC) on market dips in order to build up my arsenal of solid dividend payers. I began reinvesting my dividends, slowly but surely watching the power of compounding at work. I read the works of Warren Buffett, Peter Lynch, Jeremey Siegel and Benjamin Graham to stay motivated and on track. Much like Dividend Mantra, I began tracking each individual dividend payment I received and tallied them over time while keeping an eye on my dividend “watch list” like a hawk. These were all successful strategies that helped in my quest to set up a scenario to one day become independently wealthy.
Now my goals are in place and I’m on a designated path to financial freedom. Not a day goes by where I feel like I made a bad decision choosing to build up my net worth. I now look forward the future because the plan I set in place allows me to build a safety net to support myself down the line. I’m significantly more calm about my financial situation than when my net worth was a lackluster $0.00.
What about you? Are there things you’ve done right that you’re proud of? I would sure like to hear ’em. Sound off in the comment section below (and keep up the good work!).