How I invest on a 0 budget using Dividend Growth Investing and Robinhood
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This is how I invest on a 0 budget using my favorite method of investing called DGI. Dividend Growth Investing, I’m using the Robinhood app but this will work with your favorite brokerage app. I was able to build a small empire of employees that work 24/7, making me more income. My goal is simple, I want to invest enough money so that I’ll never run out of passive income for the rest of my life and I want to do that all before I hit the age of 35. Anyone can do this once they start, whether you’re on a budget or you’re not.
Just by owning stocks, you get paid. Simple. They literally deposit into your account for holding the stock and you don’t even have to sell it. Why do companies do this? Because they’ve run out of ideas on how to grow, if you gave them more of your hard earned income, they wouldn’t be able to make more with how much they already have. One one hand, that’s not good for growth because it means they won’t be releasing the new Tesla, but on other hand, it’s good because they’re stable, and they pay us a fixed income which is what I’m after.
You can go to dividend.com and check which companies pay said dividends by typing in their ticker symbol, or you can check in your favorite brokerage app, it’s the ones that have a dividend yield and a number next to them. The higher the yield, there more you earn. But there’s a catch, if you try to only look for high yield companies, you will more than likely end up losing money. I try to aim for 4% per YEAR, anything more than that is cool, but you should be cautious.
Side: In theory, companies can pay this dividend to us forever – without ever running out of money, as long as they are profitable which is how long I like to hold a stock anyway, forever – and I’ll show you my income from that in a moment. But unlike investing in a bond which guarantees to pay back investors money, a dividend is NOT a guarantee, the trade off is that dividends pay more money than bonds, but they come with a higher risk. That’s because dividends are paid at the sole discretion of the board of directors, meaning at any moment, they can stop paying us if they are not profitable. This recently happened to me in June with several companies including Wells Fargo because banks are hurting thanks in large part to zero % interest rates. Just recently, Jerome Powell and the federal reserve told banks not to raise their dividends or buy back their own shares meaning their stock prices shouldn’t be going up anytime soon until things get back to normal which means, if you believe that banks are going to be a big part of our future, they may represent a good value to consider buying.
Normally with dividend growth investing, I try to invest in stocks that are not only paying out dividends and growing them, but also stocks whose share prices are also increasing. I look for dividend increases, dividend payments, and stock growth. In contrast to growth stocks which is only price growth and that’s it. Now once the dividend is paid to us, the stock may fall by the same amount in price, which is usually what ends up happening, and it often times quickly recovers right back up. Sometimes, nothing happens to the price, and other times, the price goes up.
I purchased 3 stocks this past month of June. If you’re on a 0 budget, you can use something called fractional shares and pay as little as . Otherwise, I purchased SPHD, MDT, and PM. 50 shares of SPHD at .24 (,661.43). Love this one because it pays me dividends every single month,, But I also want to look at buying more VYM, lower yield, higher growth – worf it, which is Vanguard’s high yield dividend ETF. That gives me an extra .05 per year of income. I also purchased 20 shares of PM at .69 (,433.80). The third stock I purchased is Medtronic – 17 shares at .22 (,550.48), dividend safety score of 99, 43 years of consecutive dividend raises, payout ratio only at 65%.
All of these purchases will add 0.97 to my annual income. I started investing with only 0 at a time, and fractional shares will help you get started. Otherwise, I hope this journey has inspired you to start or continue your own journey to financial independence.
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