Dividend investing success stories are a great way to learn about dividend investing.
But I hadn’t gotten around to figuring out the best way to go about it.
So, this is what happened to kick me into gear…
During the Christmas holiday, Mrs. DD and I traveled to Little Rock, Arkansas. We spent a few days with my wife’s family and had a great time. That’s nice, but what is the point, you may be asking.
All Dividend Investing Success Stories Start With A First Step
On Christmas morning, I received this email…
I’m just starting to get into dividend stock investing. I know I should have started yesterday, but I didn’t. So, I need to start now.
The reason I’m emailing you is that I would like to know how I should start my kids off in dividend investing. I’m not looking for financial advice, just your opinion.
I have a 13-year-old boy and a 12-year-old girl. And, I plan on starting 3 dividend investing accounts. There will be 1 account for me and the other 2 for them.
I plan on starting their accounts with 20% of their Christmas money and some extra money that I provide.
I want this to be an educational journey for the 3 of us for as long as I live, and for them to carry on with their families.
What are your recommendations for starting right now? I’m guessing we will start each account with $300.
Thank you, I look forward to hearing from you soon!
My First Suggestion For Starting As A Successful Dividend Investor
I thought about my response for a while. And wondered to myself what direction I should go with my suggestions.
After all, I knew very little about Trent’s financial situation and investment objectives. All I knew is he wanted to become another one of many dividend investing success stories. And, he wanted his kids to learn about dividend investing.
Dividend-Paying ETFs Are A Good Place To Start
After mulling it over for a while, this is how I responded to Trent…
Thanks for your note. Sorry for my slow reply. I was traveling and visiting family over the Christmas holiday.
First, thank you for visiting Dividends Diversify and reaching out.
Regarding your question, I suggest keeping it simple, staying diversified and investing at regular intervals to get started.
With that said, I suggest the Vanguard High Dividend Yield ETF (VYM). I have personally invested in this ETF for many years.
Alternatively, you could consider the Vanguard Dividend Appreciation ETF. But, I prefer VYM. It has a higher dividend yield and very solid dividend growth, historically.
Make your initial investments. Then, as money permits, add to your shares periodically.
Monthly contributions are best, but quarterly contributions are okay too. Just be consistent and add equal amounts of money to the ETF each time. In this way, you benefit from dollar-cost averaging into the fund.
Think long-term. Make sure no one needs the money for at least 5 years. Since the markets are at all-time highs, they will “correct” eventually and VYM will go down with them.
I would avoid individual stocks when getting started. But, you or your kids might get interested in individual stocks as time passes.
For example, I have been investing in the stock market for 40 years but didn’t get serious about individual dividend-paying stocks until about 15 years ago. I had more money later in life so it was easier for me to achieve adequate diversification.
I hope this helps and best wishes in 2020!
Learning More About Trent’s Dividend Investing Success Story
Trent responded promptly. And from his reply, I learned a little more about how he wanted his dividend investing success story to take shape. Here is his response…
Thank you for your reply!
I am enjoying Dividends Diversify. You’re doing a great job with it!
I especially enjoy the stock analysis reports you’ve done. Blogs like yours are amazing for people like me. There is so much value.
Thanks for your suggestions. In January, we are going to tally up our Christmas money and open the accounts.
I’m planning on adding to the accounts automatically through direct deposit through work. Each account will have a set amount of $50 added to it on a bi-monthly basis.
I get quite a bit of overtime, so I’m thinking of having that put into a separate high-interest savings account. Once I get enough saved I will draw from it to buy individual stocks.
Also, I have another question, if you don’t mind. When you use a sum of money to buy an individual stock, how many shares do you want to buy? Do you buy 10 at a time, 30, 50, 100 or more?
The logistics of how it all comes together is where I need to learn more. In contrast, researching individual companies to invest in is what I enjoy most.
I appreciate any direction you can give. I’m looking forward to hearing from you again!
Happy New Year!!
Now I Know More About What Trent’s Dividend Investing Success Story Looks Like
I could tell now that Trent was less interested in dividend ETFs. He was more focused on individual stocks.
That’s okay with me. Now that I knew that fact, I could provide some additional suggestions. And answer his specific question.
More Thoughts On Dividend Investing Success
Here is my reply…
Since you want to go with individual stocks, I recommend you check out this article: How to Build a Portfolio of Blue Chip Stocks Paying Dividends
Diversification is your biggest challenge when getting started dividend investing with individual stocks.
So, build to a 3-5 stock portfolio pretty quickly with the aim of 20-25 eventually. More stocks are okay but it takes more time and money to manage properly.
Start with the best blue chips, like Johnson and Johnson for example. And do not have all your stocks from the same sector or industry. You do not want one stock or sector to blow up on you and tank your portfolio.
Regarding the number of shares to purchase, it is mostly irrelevant, in my opinion. You can buy as few as 1 share or as many as you like.
I think of each investment that I make in terms of dollars. If you start with 3 to 5 stocks, put an equal amount of dollars in each.
For example, you may buy
- 1 share of stock X at $100 per share
- 2 shares of stock Y at $50 per share
- 3 shares of stock Z at $33.33 per share
So, with your first $300 you would then have 3 stocks valued at about $100 each.
As you add money over time, consider which of your current stocks or new stocks represent the best value for your money.
Also, don’t let any 1 or 2 stocks get too large. Add money to your smallest holdings or add a new holding you do not currently own.
Good luck. Let me know how it goes.
A Dividend Investing Success Story Gets Its Start
And that is Trent’s start on his dividend investing success story. I think there is a lot to be learned from our email exchange.
Trent asked a lot of excellent questions. And, I know from my experience as a business school instructor that if one person has a specific question, it is likely that others have the same question(s).
Dividend Investing Success Stories Q&A
But, we are not done with our first dividend investing success story here at Dividends Diversify.
I asked Trent if he would be open to answering a few questions for me and my readers. He graciously accepted. As I said, there is a lot to be learned from what a new investor has on their mind.
All of the responses to these dividend investor interview questions were written by Trent. And proofread by Trent’s wife.
I offer my sincere thanks to both of them for starting their dividend investing success story with Dividends Diversify. And, sharing their plans, hopes, and dreams.
Here are my questions and Trent’s responses…
Why do you want to get started with dividend investing?
I decided to get into dividend investing for 3 main reasons.
- First of all, I would like to live off the dividends at some point when I decide to retire.
- Furthermore, it is a new hobby that can keep me busy and my mind occupied.
- Finally, and most importantly, I want to get my kids started. I wish someone would have done something like this for me at their age.
Right now, my kids do not understand why I am walking around talking about stock prices, percentages, ratios, dollar-cost averaging, and so on. I think in 20 years they will see how important this time was for them.
This will be a journey we can share forever. And, possibly create a financial legacy for my kid’s kids, and further.
What are your goals and objectives for the money?
My goal is to supplement my retirement with dividends.
I just turned 42, so I’ve got 20 to 25 years left to work. I would love to retire at 55, but that may be a little difficult.
Right now, I’ve got some extra cash and I’m working quite a bit of overtime. So, instead of spending it, I’m going to make it work for me. I’d like to see how far things can go.
To buy stocks, you need a brokerage account. What brokerage company did you choose? Why?
I chose to go with TD Ameritrade for my brokerage accounts.
I went with TD Ameritrade based on a recommendation from my brother-in-law. He has used them for several years.
Their reviews seemed to make this a great choice. They have several more options than some of the other brokerage accounts. They are also cheap, so I get to keep more of my money.
I think the other brokerages are good options as well. There didn’t seem to be a bad choice. I didn’t want to over-analyze, so I picked one I knew and went with it.
Was it easy to open the brokerage account? Did you encounter any difficulties with the process?
Opening the accounts was super easy.
I opened 3 accounts, 1 individual brokerage account and 2 custodial accounts for my kids. I think setting up all 3 took maybe 30 minutes.
The most difficult part was deciding which sweep account to go with. I’m still not sure what this is, or if I made the right choice.
Once I got all 3 set up, I linked the kids 2 custodial accounts to my account. In this way, I can control all of them from one sign in. This was very simple to do.
The next day at work, I set up a direct deposit to each account. I wish I would have done this many years ago.
What is the first stock you plan to purchase? Why?
The first stock I will buy is the Vanguard High Dividend Yield ETF (VYM).
I set up a direct deposit on all 3 accounts. With this money, I will be putting it all into VYM once a month.
Any extra cash that I get from working overtime or other income sources will go to individual stocks. And 20% of any money my kids receive will go into buying individual stocks of their choice.
What other dividend-paying stocks do you have on your watch list? Why?
This is all new to me, so I will be researching a lot of companies in the future to figure out what I am going to do.
Initially, when I first started looking into dividend investing, I would have told you I want to invest in companies I use daily and that pay a dividend.
So, the following companies are in my daily life. I will be checking into these companies, but I think my main focus going forward will be blue-chip stocks.
Doing the research is what I’m most interested in. I enjoy looking for little treasures like the companies and their stocks listed below.
Trent’s Dividend Stock Watch List
- Ameren (AEE)
- American Water Works Company (AWK)
- AT&T (T)
- Casey’s General Stores (CASY)
- Honda Motor (HMC)
- Apple (AAPL)
- Alphabet (GOOGL)
- Walmart (WMT)
- First Busey Corporation (BUSE)
- Wells Fargo (WFC)
- Clorox (CLX)
- Johnson & Johnson (JNJ)
- La-Z-Boy (LZB)
- A.O. Smith (AOS)
- Archer Daniels Midland (ADM)
- Norfolk Southern (NSC)
- CSX Corp (CSC)
- Target (TGT)
- Tanger Factory Outlet (SKT)
- Brinker International (EAT)
- Pepsi (PEP)
- Walgreens Boots Alliance (WBA)
- Proctor & Gamble Co (PG)
- Techtronic Industries (TTNDY)
- Home Depot (HD)
- Nexstar Media Group (NXST)
Have you discussed dividend investing with your kids and what you are setting off to do with them?
I told them we are going to start investing our extra money to see how much it will grow when they are older. I also told them this would be a source of income for them later in life if they leave it alone and keep adding to it.
They don’t really get it right now, but I’m sure they will come around the more involved we get. Both of them were more than willing to give me 20% of their birthday and Christmas money.
I think when they get older and see the money actually growing, they will get more excited.
Do your kids have any specific dividend-paying stocks that interest them?
We haven’t gotten that far yet. I need to figure out things a little more before they start telling me what they want. I don’t want them to make big mistakes because of ignorance on my part.
If I had to guess what they would pick, my son would pick something to do with gaming and shoes. And my daughter would pick something to do with fashion and social media.
What are your plans for the cash dividends you will receive from the stocks you purchase?
- Take the cash
- Reinvest the dividends automatically back in the company that paid them
- Let the dividends accumulate in cash and reinvest lump sum into a stock of your choosing
Just getting started I am going to have it automatically reinvested in the company that paid them. I may change my mind on this in the future.
Trent’s Dividend Investing Success Story Wrap Up
This is such a fabulous dividend investing success story. And I want to thank Trent and his family again for participating.
Who would have thought that the email I received from Trent on Christmas morning would result in such an awesome article? And, hopefully, a series of dividend investing success stories moving forward.
To wrap up, here are several dividend investing tips mentioned in the article. These are the essentials that can lead to your dividend investing success story.
Dividend Investing Success Stories: Key Points
- Get started – every successful investing journey starts with a first step
- Time is your friend – start dividend investing at a young age
- Low fee dividend-paying ETFs are a great place to start for a new investor
- Individual dividend-paying stocks are an excellent option when the time is right
- Invest equal amounts at regular intervals – dollar-cost averaging
- Invest in dividend stocks for the long term – at least 5 years
- We have been in a long bull market – stocks do go down and will go down in the future
- For each investment – think in terms of dollars, not the number of shares
- Make sure you have adequate diversification among holdings
- Living off dividends is attainable – it just takes time and patience
- Save and invest your extra income from overtime or bonuses
- To start investing, you need a brokerage account – opening one is easy
- Use a zero-commission stockbroker to keep trading costs low
- Every investor should set investment objectives and a plan to achieve them
- Do your research – know what you buy and buy what you know
- Create a watchlist
- There are great rewards in helping your kids invest at a young age
- Automate investing through direct deposit and other means
- Reinvest your dividends either a lump sum or automatically in the shares that paid them
Would you like to be featured in an article about dividend investing success stories? If yes, drop me an email at dividendsdiversify (at) gmail (dot) com.
Tell me a little about where you are at in your dividend investing success story. You can be a beginner, expert or anywhere in between. And, we will take it from there.
Disclosure & Disclaimer
This article, or any of the articles referenced here, is not intended to be investment advice specific to your situation. I am not a licensed investment adviser, and I am not providing you with individual investment advice. The only purpose of this site is information & entertainment. We are not liable for any losses suffered by any party because of information published on this blog. See this site’s Disclaimer and Privacy tab for more information.