Investing

Two ways to make money with stocks

There are two ways to make money with stocks, one is based on hope the other is based on data. The 1st way to make moneyThe first way to make money with stocks is to buy shares when they are priced low, and then wait for the stock price to go up. Then you hope … Continued

There are two ways to make money with stocks, one is based on hope the other is based on data.

The 1st way to make money
The first way to make money with stocks is to buy shares when they are priced low, and then wait for the stock price to go up. Then you hope that someday the shares will be worth more than what you paid for them.

 
The 2nd way to make money
The second way to make money with stocks is to collect the dividend. A dividend is money you receive from a company just for owning their shares. For example if a company is paying $1 share and you own 1000 shares you will receive $1000 each year for as long as you own those shares and as long the company continues to pay the dividend. You can spend your dividend money or re-invest it if you wish.
 
How much money can you make with dividends?
The amount of the money you receive from dividends depends on three things:
  1. How many shares you own
  2. How much of a dividend a company is paying per share
  3. How quickly a company increases its dividend

Click here to download our Excel spreadsheet to estimate how much money you can make.

What are some real-life examples of dividends earned?
I will share with you my 3 personal examples with stocks that I still own and earn dividends with.
 
  • I purchased 185 shares in TRP.TO at $13.40 each in 2000
  • I purchased 125 shares in CM.TO at $73.90 each in 2005
  • I purchased 144 shares in JNJ at $62.67 each in 2007
Total amount invested:
TRP.TO: $2479
CM.TO: $9237
JNJ: $9024
Total: $20,740
 
Total amount of dividends received as of today (Nov 20, 2020):
TRP.TO: $6457
CM.TO: $8043
JNJ: $5531
Total: $20,031
 
As you can see $20,740 invested has resulted in $20,031 in dividends received so far. The risk to the initial investment has almost gone down to zero.
 
Using today’s (Nov 20, 2020) share price the total value of the investment (including dividends) is: $65,236

 

What is the secret to dividend investing?
The secret to dividend investing is dividend increases. Quality companies increase their dividend each year, have a look at some examples:
 
 
A dividend increase equals more money in your pocket. Also important to note that there are some companies in the above table that have been paying dividends since the 1800’s.

 

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