One of the things I really like about owning dividend stocks is that the company’s I invest in work for me. What do I mean by that?
WORK LIFE
I spent many years working in corporate America and enjoyed that time in my life. I worked long hours and learned a lot about business, finance, and accounting. During that time, I met a lot of interesting people and did meaningful work. But as the years went by, I always thought that I wasn’t doing what I wanted with my life.
I spent my time serving others associated with the businesses I worked for. You may know how it goes: reporting to the boss, managing employees, solving customer problems and doing things to make the business better. Most noteworthy, it was someone else’s business. I focused on maximizing the value of someone else’s company and their pocketbook. Now don’t get me wrong, this wasn’t volunteer work. I did this all in exchange for a paycheck. Perhaps an annual bonus was included if the business did well.
Especially relevant, I was a rental. The company’s I worked for rented my time in exchange for compensation. My rental fee was fixed as a salaried employee. It was in the company’s best interest to get as many hours of work out me to maximize the value of the rental fee. And when they felt my services were no longer necessary, they had the option of letting me go. Now don’t get me wrong, I wouldn’t go back in time and change a thing even if I could.
HOW ABOUT YOU?
Does this sound familiar to you? Maybe you are in a similar situation working and renting out your time. Would you like to have more freedom of choice with how you spend your day? Would you like to have one or more companies working for you?
ONE SOLUTION
Building a passive income stream from dividends and interest is one solution. That’s what we are all about here, at Dividends Diversify. This isn’t a get rich quick scheme. It’s about adding to your portfolio of dividend-paying investments month by month, little by little to build your own stream of passive income. Each time you receive a dividend payment, you can feel good that the company that paid it is working for you.
I like to focus on companies that provide a valuable business service or product line. Companies that allocate a sizable portion of their cash flow to paying dividends. I like companies that work hard for me. Companies that are continuously building value allowing them to increase their dividend over time.
This is what I expect in exchange for renting them my money. And of course, if the company no longer meets my objectives, I let them go and rent my money to another one that does. In my mind, turnabout is fair play. So let’s get companies working for us, building our wealth, one dividend at time.
ADDITIONAL INFORMATION
Check out the Dividends Diversify model portfolio for a few examples of where to put your money to work. Let’s have the companies and investments we rent our money to work for us, not the other way around. Do you have a good example of a dividend-paying company that has worked hard for you? Please leave a comment and let me know.
Disclosure & Disclaimer
This article, or any of the articles referenced here, is not intended to be investment advice specific to your personal 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.
Mr. ATM says
That’s a great analogy Tom, when you work for someone, you are a rental. That’s exactly what it is. Doesn’t matter how high one gets on a career ladder, they are always working for someone else.
It’s not a bad thing if that’s what someone wants to do their entire life, but for anyone who wants complete freedom, Dividend investing provides a way out. It’s not fast way to get rich as you said, and takes time, but it is the only proven strategy for success in investing.
I would recommend anyone interested in dividend investing to read “The Single Best Investment” by Lowell Miller.
BTW, I’m wondering how you like teaching? Do you think you have enough freedom in how you teach, or you still have to worry about pleasing someone above you? I’ve heard stories about how faculty at university level are pressured into doing more research to get outside funding for the dept or else they don’t get a tenure or may let go.
Thanks,
Mr. ATM
Tom says
Hey Mr. ATM. Thanks for stopping by, your comments and the book recommendation. I will have to check it out. Also, congrats again on your featured article in Rockstar Finance today. Regarding teaching, I really like it. I teach in a program that is mostly staffed by current and former practicing professionals in their respective fields. It’s not a research heavy program and I have no such responsibilities. Within the broad program objectives of each class, I have complete autonomy to teach the material as I see fit. The stories you have heard are likely true for tenured/tenure track PhD’s working at many schools. Of course, I don’t get paid as much as them or have the security, but that’s what our passive stream of dividend income is for. Thanks again!
Mr. Robot says
A great and easy explanation for anyone interested in the field. Thank you for sharing! Are you inspiring students in this area?
Tom says
Hi Mr. Robot,
Thanks for stopping by and visiting the site. I do my best to inspire my students and do teach some techniques in my financial analysis class that are relevant to the blog.
Tom
Mike @ Balanced Dividends says
“Building a passive income stream from dividends and interest is one solution.”
Well said. One solution. But powerful when combined with others.
Each dividend received is like a small hit of adrenaline for me…it’s very motivational. But it took some time – and still does – to ensure that expectations are managed properly. It can also be disappointing at times.
Tom says
Hi Mike, Agree with your thoughts. Like any strategy, passive income through dividends and interest has its pros/cons and good/not so good periods. Never the less, I’m sticking with it. Regardless of the investment strategy one pursues, it is important to stay with it over the long term. Tom