How to Make Money Investing in Dividend Stocks (Passive Income)

Hi, so today I want to talk about how you

can make passive income from dividends and

investing in stocks. So I made a video a

few videos back and I was talking about

how to make passive income on the

internet, but I didn't really talk about

the stock market because I felt like that

deserved an entire video on its own. And I

didn't really know much about the topic

until recently, and I have been doing a

lot of research and studying into this

topic. So about a week ago, I didn't even

understand or know what a dividend was.

I've heard of the word before, but I never

really looked up what it meant because it

seemed too confusing. But the last 2 days,

I have been nonstop reading and listening

to videos about dividends and how you can

make passive income from investing in the

stock market and then getting dividend

payouts. So first of all, I have to

clarify that I am no expert on this topic

and I might get a few things wrong. And if

I do get things wrong, feel free to

correct me in the comments below. We can

all learn together. I've only been

researching about this since 3 days ago,

so I feel like I do have a basic

understanding of the concept. So first of

all, what is a dividend? A dividend is an

amount of money a company pays you as a

reward for purchasing their stock or their

shares. So for example, if you have 10

shares in Apple and they pay you $5

per share, then you'll get $50 every year

from Apple as thanks for purchasing and

holding on to their stocks.

Now, when it comes to making money on the

stock market, I feel like there's 2 main

ways to make money. The first way is

timing the market, and what you do is you

try and buy shares when they're really

cheap and when the company's not doing

well, and then you hold on to the shares,

and then you want to sell them later when

the value goes up again. Now I feel like

this is a bit risky because if you time

the market wrongly or you don't know what

you're doing, you might end up being stuck

with a bunch of stock that doesn't go back

up in value. Now what I'm interested in is

the other way of doing it, which is

staying in the market and holding on to

stocks long term. And what you want to do

is you want to buy shares and stocks in

companies that you think are going to be

safe and reliable and they're still going

to be around in 10 or 20 years and they'll

carry on giving you dividend payouts as

long as you hold on to the stock. And my

goal is I want to be able to have passive

income from dividends coming into my

account and I want to be investing in

stocks and buying more stocks in companies

I trust and then holding on to those

stocks for years and years and years

whilst getting dividend payouts. For me

personally, I'm not really interested in

trying to time the market and buy low and

sell high. As the famous Warren Buffett

once said, time in the market is better

than timing the market. Not all companies

pay a dividend. Some companies don't pay

any, and then some companies pay out a

little bit, and then some companies pay

out a pretty impressive big amount of

dividends. But when you're choosing

companies to invest in because you're

interested in the dividend payouts, you

have to think to yourself, is this company

still going to be around in 5 or 10 years?

Is it a failing company? Are they doing

really badly? Do they have any chance in

recovering? So after doing lots of

research, I have picked out 5 companies

that I feel like will still be around in

the long term, and they pay out pretty

good dividends. And I have actually

invested a total of £2,000 or $2,583

of my own money into my dividend

portfolio that I have just begun to grow,

and I'll show that to you now. I guess

I'll show it to you now. Okay, so first

of all, I want to show you some research

that I've been doing on this list. This is

a list of different companies, and this

number is the amount of dividend income

you can expect if you invest in

£500 worth of shares in the company.

So obviously £500 isn't going to get you

the same number of shares in each company

because some companies have a more

expensive cost for one share. For example,

Amazon. For one share in Amazon, it will

cost you over $3,000. For one share in

Apple, it'd cost you about $120. So what

I did was I figured out how many shares

I could get for £500 in each company, and

then I times that by the annual dividend

that that company pays every year for 1

share. So I timesed that number by the

amount of shares I could get in each

company. Hope that was easy to

understand. I think we understand, so

let's move on. So for example, if I bought

£500 worth of stocks in McDonald's,

which is this one, that would give me—

McDonald's would pay me $14.44 every

year for holding on to those stocks. Now

obviously this number can go up and down,

it's not a fixed number. If McDonald's

stock rises in value, then so will the

dividend payout. If it drops in value,

then the amount of dividends you'll get

every year will also go down. Now most of

these companies pay 4 times a year,

quarterly, so you'll get this payment 4

times a year, but these numbers are the

annual numbers. So the next company on

this list is MO, which is the the code for

the company. The company is called Altria

or something, and they make cigarettes.

Now, as you can see, I've put a circle

around it because they give a very

impressive dividend of $55.83

a year. So if you, if you have £500 to

spare, you could buy £500 worth of

McDonald's stocks or £500

worth of Altria stocks and look which

company will pay you more in dividends.

The smoking tobacco company will pay you

way more money than McDonald's will pay

you. Next on the list is Coca-Cola

with the sign KO, and they will give you a

total of $21 in dividend payouts if you

buy £500 worth of their stock and then

hold on to it for the whole year. And then

Apple will pay you $17, This broadband

company will pay you 21. Johnson and

Johnson will pay you 17. I think we

understand what this list means now. So I

have been researching these companies and

doing my calculations based on £500 worth

of stocks. And as you can see, XOM, which

is ExxonMobil, you know, that company that

produces oil, it's like some kind of

really, really big oil company. They have

a really good dividend payout of $65 in a

year if you had £500 worth of stocks.

$65 is really good. These were just a

selection of companies that were

interesting to me, and I decided to look

up how much they paid in dividends. I also

Googled high-yield dividend-paying

companies, and these are the ones that

showed up. And now I'm going to show you

which companies I chose to invest my own

money into.

Okay, here is the companies I

decided to invest in. I invested in a

total of 5 companies and I had a budget of

£2,000, which was $2,583.

Okay, let me explain what this list is.

On the right-hand side, we have the total

amount that I spent on stocks in the

company, and this list here is the amount

of dividends I predict that they will pay

me if I stay with them for a year,

and this is how many stocks in each

company I bought. So I bought 7 stocks

in Apple for a total of $830.

I bought 13 stocks in Altria for $510.

I bought 3.5 stocks in IBM for

$440.

$7, I think that says. And then I bought

13 in Exxon for $439,

and then I got 2 stocks in 3M for $341.

And if I hold on to the stocks for a whole

year, I should get a total of $147.91

in dividend payouts from all of them

combined. Now you might be thinking, you

just spent $2,583 so you

can make $147 every year, and according

to my calculations, it will take 16 or 17

years for, for me to get my money back.

Now you might be thinking this is a stupid

idea, and I thought this was a stupid idea

at first as well because I've spent $2,500

and I'm only getting $150 every year.

Well, really, I haven't lost the $2,500.

I still have the stocks and According to

my gut feeling, I think these companies

are still going to be around for a long

time, and I don't, I don't feel like I've

wasted my money buying their stocks.

Yeah, if you flushed the $2,500 down the

toilet and you were only getting $150

every year and it took you 17 years to get

that money back, then yeah, it would be

kind of pointless. But you haven't flushed

anything down the toilet because you still

have the stocks and they still have value,

and the value could carry on going up.

And if you think it's going to go down,

well then just sell the stocks and buy

something else. But as long as I hold on

to my stocks, I will carry on getting

roughly this amount of money every year as

passive income. And I want to grow this

amount, so if I times it by 10, hopefully

I'll be getting £1,500 a

year or £120 a month if I invest £25,000.

And in general, on average,

you would be looking to invest about

$400,000 in order to make $1,000 a month

in passive income, and that is my ultimate

goal. And you might be thinking $400,000

is a lot of money, and I guess it is, but

if you spread it out over the course of 20

or 30 years, $400,000 isn't really a huge

amount of money, and it would be really

nice to be getting $1,000 in passive

income every month from basically not

really doing anything apart from just

buying stocks. Okay, so I chose Apple

because obviously Apple is a really famous

company and I feel like they're going to

be around for a long time and they're

doing really well. People love Apple

products, so that's why I chose them

to invest in. I also chose Altria, who

make tobacco products, and I feel like

smoking is going to be around for a long

time as well. People are still going to be

smoking and buying cigarettes. Way into

the future. So I feel like they are a very

good company to invest in and they give a

really good dividend payout. I also chose

IBM because they do technology stuff,

computer chips for Apple and other,

other tech companies rely on IBM for chips

and processors and that kind of stuff. So

I felt like IBM was a safe bet to bet on.

And Exxon, they are a big, big oil company

and I feel like oil, crude oil is still

going to be valuable and required and

important even in the future. Even though

renewable energy is becoming a thing, I

still feel like oil is still important and

is going to remain an important product

for the next 10 or 20 years. I feel like

one day in the future we will be relying

100% on wind and solar energy and

renewable energy, but I think it's going

to take a long, long time to get to that

point. And until we do get to that point,

oil is still going to play a crucial major

role. So that's why I chose to invest in

Exxon. Plus they give really, really good

dividend payouts. And I also chose 3M

because it kept coming up as recommended,

as a recommendation from other people,

and it sounded like a good idea, but they

don't really pay much in dividends. So I'm

thinking about selling my stocks in 3M and

swapping out for something better. But 3M

They're famous for Post-it notes, sticky

notes, and they sell a bunch of other

things as well. I don't really understand

what they do very well, to be honest. I'm

thinking about switching out 3M for maybe

Coca-Cola because they're more reliable

and people love Coca-Cola, or maybe AT&T.

I'm not sure yet, I'm still trying to

decide. And the reason why I became

interested in dividend stocks and

investing is because I love passive

income. I think it's a great idea. The

idea of being able to make money without

actually having to do any work is just the

best idea in the entire world. And I've

got all this money that I made from my

YouTube channel and from my dad's

inheritance, and it's just sitting in the

bank not doing anything. And although it's

great to have savings, I would really like

to grow my savings. And I just feel like

if it's sitting in the bank not doing

anything, it's not really growing. And I

thought I might as well just put this

money into the stock market and grow my

portfolio and earn passive income as

dividends. And you might be thinking,

well, you're spending $2,000 to make like

$100 a year, isn't that kind of stupid?

And not really, because that $100 is going

to keep growing year by year because I

just keep reinvesting the dividends back

into buying more stock. So it's just going

to keep growing by itself on its own. And

if I really desperately need the $2,000

back, I can just sell all my stock. As

long as the stock hasn't crashed

completely, I can probably get around the

same amount of money that I put in when I

want to take it back out, or maybe even

more if the value of the stock has

increased. So yeah, I do feel like it's a

waste to have all this money just sitting

in my bank accounts not doing anything.

And I've been thinking for such a long

time, what can I do with this money to

make more money? And this dividends

income, dividends investing idea sounds

like a really great idea to me because I

can make money just by using my

money. My money, my savings is making me

money just by me investing in companies

and buying shares and stocks. Sounds like

a good idea to me. My plan is, my goal is

to invest maybe $1,000 every month

into the companies that I have chosen and

to carry on buying more and more stocks in

good companies that I think are reliable

and will pay out a good dividend. And then

maybe in 10 years' time, I will have

enough passive income from dividends to be

able to live off, or at least supplement

my current income with, with more passive

income. That's really the dream. To keep

trying to find new ways to make passive

income and make money without really doing

anything.