01-13-2016, 09:17 AM
(This post was last modified: 01-13-2016, 09:21 AM by Roadmap2Retire.)
Hi CD,
To answer your other question on how much will you bring in at the start and how long will it take to reach $10K or $20K...it depends (as is the answer usually).
To start off, your dividend will be very low - so the first year or two can be a bit discouraging and it might seem like its not worth it. But as you build your portfolio - your income will grow and gets compounded over time. Addition of new money coupled with the increase in dividends will keep that income growing.
When I started off, I used a rule of thumb for projections (just for the sake of managing my expectations) as an average starting dividend yield of 3% and growing at 7-8% per year. So, for e.g., if you invest $10K now, with those assumptions you can expect to make $300 in dividends the first year, $324 next year etc. Hope that gives you an idea.
I also made sure that I had a wide spectrum of dividend payers in my portfolio. Some companies with low starting yield but high growth of dividend rate (look at companies like SBUX, V, DIS etc), and some companies with a high starting yield and low dividend growth rate (companies like T, VZ, SO etc) and then some companies which fit right in the middle with decent starting yield and decent dividend growth rate (companies like JNJ, WFC etc).
Read as much as you can. Pay close attention to diversification and never put eggs in one basket no matter how lucrative an investment might seem and may appear to be a once-in-a-lifetime opportunity.
Hope that helps.
To answer your other question on how much will you bring in at the start and how long will it take to reach $10K or $20K...it depends (as is the answer usually).
To start off, your dividend will be very low - so the first year or two can be a bit discouraging and it might seem like its not worth it. But as you build your portfolio - your income will grow and gets compounded over time. Addition of new money coupled with the increase in dividends will keep that income growing.
When I started off, I used a rule of thumb for projections (just for the sake of managing my expectations) as an average starting dividend yield of 3% and growing at 7-8% per year. So, for e.g., if you invest $10K now, with those assumptions you can expect to make $300 in dividends the first year, $324 next year etc. Hope that gives you an idea.
I also made sure that I had a wide spectrum of dividend payers in my portfolio. Some companies with low starting yield but high growth of dividend rate (look at companies like SBUX, V, DIS etc), and some companies with a high starting yield and low dividend growth rate (companies like T, VZ, SO etc) and then some companies which fit right in the middle with decent starting yield and decent dividend growth rate (companies like JNJ, WFC etc).
Read as much as you can. Pay close attention to diversification and never put eggs in one basket no matter how lucrative an investment might seem and may appear to be a once-in-a-lifetime opportunity.
Hope that helps.