Dividend Investing is the fastest way to earn passive income. There I said it. You can fight me all you want with your rental properties, start-up businesses, and MLMs.
I say this because you can literally start earning sit-on-your-lazy-ass-and-earn-dollars-in-your-bank-account-passive-income starting today for very little capital.
What is Dividend Investing?
A dividend is money paid to a company’s share holders that comes from the company’s earnings.
Let’s say you and your friend start up a lemonade stand. In the first year, you earn $100 in profits. You decide to put $80 back into the lemonade stand to grow it, expand it, and replenish supplies. The remaining $20 you split up between you and your friend.
This a dividend since you and your friend are shareholders in the lemonade stand.
So why is dividend investing the fastest way to passive income?
Becoming a shareholder is easy. All you have to do is buy at least 1 stock in a company in order to become a shareholder of that company. Once you own one share, you’re already on your way to earning passive income through dividend investing.
Let’s take a look at my favorite monthly dividend stock: Realty Income (O).
According to Nasdaq, Realty Income currently pays $0.226 per share. Its last payment day was on March 15, 2019 and the next payment date is on April 15, 2019.
This means that if you own just 1 share of Realty Income stock, every month you are paid $0.226.
This is the definition of passive income. And this is why it’s extremely easy to start earning passive income through dividend investing.
How much does it cost?
As of the close of business today, 1 share of Realty Income costs $72.28 per share. I was fortunate enough to buy this back when it cost $60 per share.
That means if you buy 1 share of Realty Income right now, you will earn at least $0.226 per month, every month. Additionally, Realty Income has been increasing their payouts every year as you can see in the Nasdaq history table.
At this rate, you will earn your money back in less than 300 months.
This is one of the strategies of how the rich continue to get richer.
If a rich person decided to invest $100,000 into this stock and purchased 1,383 shares of Realty Income at a price of $72.28 per share, they will earn $312.67 every month in passive income dividend payments.
With the $312.67, you can buy even more shares of stock and continue to increase your dividend investments, and thus passive income.
This is why I prefer dividend investing for passive income
When I say dividend investing is the fastest way to start earning passive income, I mean it. All you need to do is a computer. Log into your brokerage website, buy some stock. And then you’ll start earning dividends.
A lot of people might do dividend investing in more prominent companies such as Coca-Cola. They currently only cost $46.47 per share and pay $0.40 per share every quarter.
You can go even cheaper and do your dividend investing in REITs such as GAIN or APLE. GAIN pays $0.068 per share every month and only costs $12.09 per share. APLE pays $0.10 per share every month and costs $16.73 per share.
The poor man can start off very small and grow into a large tree over time. Be mindful that this is not a get-rich quick strategy. This is a wealth building strategy that happens over time.
A wise man once said “The best time to plant a tree was 20 years ago. The second best time is today.”
Start planting today so that one day it will grow into ginormous tree.
How Do I Get Started With Dividend Investing?
First thing you’ll want to do is open up a brokerage account if you don’t have one already.
Then I would select dividend stocks that are on the S&P Aristocrats Index (SDY) or on the Vanguard Dividend Growth Fund (VDADX). These are solid companies that have a history of raising their dividend payments throughout the year.
Alternatively, you can just purchase the fund itself. Simply log into your brokerage account and purchase SDY or VDADX.