You want to start dividend investing, but you don't know where to begin? Dividend investing is a great way to earn passive income on your money, so let me show you have to start with $1,000!
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When we talk about dividend investing there are a few avenues we can go down. We can do individual stocks or funds (more specifically ETFs). In this video I cover ETFs because I personally believe that is a great place for beginner investors to begin & learn how the stock market works.
Within that, you can focus on two different avenues. Funds with lower yield, but higher growth. Or, funds with lower growth, but higher yield. The difference seems minuscule at first, but over a 10 year time frame, it really does add up.
If we compare two different ETFs here... VYM (high yield, lower growth) vs DGRO (low yield, higher growth) we can see the vast differences that occur.
Starting with VYM, if you were to put in $1,000 into this fund, currently it has a 2.73% yield, and it grew at 9.2%/year, in year one you would have a total dividend income of $27. However, after 10 years, you would have a dividend income of $77 and a finishing portfolio value of $2,891.
If you were to do the same thing with VYM, but this time you added $300/month, after 10 years your dividend income would be $1,540 with a portfolio value of $57,956. That is a very drastic difference with just adding $300 each month.
If we compare this to DGRO, the same $1,000 into this fund, currently it has a 2% yield, and it grew at 17.4% each year, in year one you would have a total dividend income of $20. However, after 10 years, you would have a dividend income of $101 and a finishing portfolio value of $5,164.
If you were to do the same thing with DGRO, but this time you added $300/month, after 10 years your dividend income would be $1,583 with a portfolio value of $80,714.
The reason I show these examples is to double down on the fact that you should focus LESS on the dividend income today (if you are young & have a long time horizon), and focus more on dividend growth stocks. That is what I am doing with my portfolio. If you look at the example above, even though DGRO has a lower yield, over a 10 year time span, your dividend income actually came out to be greater AND your portfolio value is over $20,000 more.
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DISCLAIMER: Decade Investor, including but not limited to any guests appearing in his videos, are not financial/investment advisors, brokers, or dealers. They are solely sharing their personal experience and opinions; therefore, all strategies, tips, suggestions, and recommendations shared are solely for entertainment purposes. There are financial risks associated with investing, and Decade Investor's results are not typical; therefore, do not act or refrain from acting based on any information conveyed in this video, webpage, and/or external hyperlinks. For investment advice please seek the counsel of a financial/investment advisor(s); and conduct your own due diligence.
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Time Stamps
00:00 Intro
0:52 What is Dividend Investing?
3:00 Low Growth, High Yield ETF
5:28 High Growth, Low Yield ETF
7:15 Why Do I Like Low Yield?
8:55 Make Sure to LIKE & COMMENT!
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