Dividend STOCKS Investing： DO THIS NOW to Earn PASSIVE income online

In today's video, we'll be talking about

dividend stocks and dividend investing.

So here we have in front of us a dividend

stock called AbbVie Incorporated, ticker

symbol ABBV. Now, this is a pharmaceutical

company that produces medicine and cures

for diseases. And this is a good dividend

stock. So first of all, when you're

thinking about dividend investing, it's

kind of different to growth investing

because with With growth investing,

you're hoping that you buy low and then

you sell high, and the gains of the stock

is what's going to make you money. But

with dividend stocks and dividend

investing, you don't really care too much

if the stock goes up or down, although it

would be nice if it just goes up. But it

could go down, but it doesn't really

matter because you'll be getting those fat

dividends. Now, what is a dividend?

Basically, a dividend is the amount of

money that a company is going to pay you

the shareholder or the holder of the

stock. So you can always find out the

dividend yield of a stock by going onto

Google and then just typing in the ticker

symbol. So we could look up Bank of

America dividend yield, and it will show

here the annual dividend yield. So the

annual dividend yield is basically the

amount of money based on a percentage that

they're going to pay you in a year. Now,

this is kind of confusing if you're new to

this, and I was very confused with what

this actually means. So let's say, for

example, we invest $1,000 into Bank

of America. So as a shareholder holding

$1,000 worth of Bank of America stock,

Bank of America is going to kindly pay us

3.35% of that $1,000 every

year, but they're not going to pay it all

at once. They're going to pay it at the

end of each quarter. So usually there's 4

quarters. So using my calculator, I worked

out that 3.35% of $1,000 is is $33.50.

So Bank of America is going to pay you

$33.50 every year. So divide that

by 4, by each of the 4 quarters, and

that's how much they're going to pay you

every quarter. So you're going to get paid

like under $8 every quarter. And then if

you go into weeble.com, you can find more

information about a company's dividend

action and dividend history. So we're on

Bank of America right now. And what you

want to do is you want to click on

corporate actions and look at the

dividends tab. And then over here at the

bottom right, you'll see they pay around

$0.22 per share in cash dividends. And

they made a payment in March of this year

and June and then August. And then the

next one will probably be around November.

So for example, if you had 100 shares,

you just times that by 100 and they would

have paid you, what, $22? Yeah, they would

have paid you $22 in March. And then $22

in June and then $22 in August. If you had

100 shares currently, currently it's

$28.65 per share. So to get 100 of

those, you would have to spend like

$2,800. So for an investment of $2,800

into Bank of America, you would be making

$22 every quarter. So for a total

of— I mean, it's not even $100. It's like

nearly $100 a year. If you had $2,800

invested into Bank of America. Now you

might be thinking that's not very much,

and you'd be right. So to actually make

any decent money from dividend investing,

you need to have a lot of money invested

into the stock. Most people say you aim

for like a 4% dividend yield. You want to

have like $400,000 invested into dividend

stocks to be able to make an annual

dividend income of like don't know,

$20,000, $30,000, or $40,000 a year.

So to be able to make any reasonable

noticeable amount in dividends, you do

need to have a lot of money in dividend

stocks. But that doesn't mean you can't

just like put a couple thousand into

dividend stocks and have like a small

dividend stock portfolio and still enjoy

getting like some dividend payments

ranging between a couple hundred dollars

or maybe even up to $1,000 every few

quarters. You don't need to have like half

a million dollars into the stock market.

You do if you want to be able to live off

dividends. Now living off dividends is a

completely different story. And to be able

to do that, number one, it depends where

you're living. Like if you're living in

America, then yeah, you're going to need

like $30,000, $40,000 a year, which means

you need at least half a million invested

into dividend stocks into the stock

market. But if you're like me living in

Thailand, you'd probably be fine on just

$10,000 a month, which which means, I

mean, $10,000 a year, which means you

would only need to have like $100,000 or

maybe even less invested into dividend

stocks if you go for higher dividend yield

stocks. So next I want to talk about

dividend yields and the difference between

a low yield and a high yield. Okay. So

Bank of America, for example, has a 3.35%

dividend yield annual. And we would say

that that is just like an okay yield.

It's not really low, like 1%. I think

Apple has like a 1%. Or less dividend

yield, which is pretty rubbish. And some

companies have as high as over 10%

dividend yield. So I'd say like 10%, 8% or

more is high, and then around 3% and 4%

are normal and what is considered to be

safe. And then below that is just really

too low. So for example, Apple has a 0.54%

dividend yield, not even 1%. So it's

pretty rubbish. FedEx has a 2% yield.

Microsoft has a 0.83% yield. Walgreens

Boots has an 8.72% dividend yield,

and that is because the stock has come

down so low. So usually when the stock

value or the price of the stock of a

company goes down a lot, then the more it

goes down, the higher the dividend yield

will become. But as the stock price goes

up, the higher it goes up, the lower the

yield will be. So it's a good idea to buy

these dividend stocks when they've crashed

down so low, because not only do you get a

lower average cost, into buying the stock,

you also get a higher dividend yield. But

as the stock goes up, you will get less

dividends because that number will change.

This dividend yield number doesn't stay

the same. It's not like a fixed solid

number. It does fluctuate up and down as

the stock price moves up and down. You can

see the Altria Group, which produces

tobacco and cigarette products, they've

got a 9% yield. And usually tobacco

companies and energy companies have very

high annual dividend yields. Now that

might look enticing and you might think,

wow, 9% yield, why would I get like, oh,

3% Bank of America yield when I can get 9%

yield from Altria? Well, you got to be

careful of something called a dividend

yield trap. So if it's too high and it

looks too good to be true, then there's a

chance that it might be too good to be

true. As you can see on the stock chart

for Altria, the stock is not looking too

good, is it? I mean, it's just come down

and down, down Since 2017, the stock has

just been free falling down. And what

companies will do, they'll increase their

dividend yield percentage to try and

entice or tempt investors into buying the

stock because they're like, hey, come and

buy our stock. We got 9% yield. But it's a

really bad idea to buy a stock of a, of a

dividend yield company if the company is

not doing good and the future looks bleak

because it doesn't matter if they're

paying you like 9% dividend yield every

year, if every year you're losing like 5%

in capital gains because the stock keeps

going down, down, down. And then

eventually what will happen is— well,

this happened to Intel. The stock did so

badly and the company was performing so

badly, they couldn't afford to pay the

dividend anymore and they actually slashed

the dividend. So this is Intel, and I'm

pretty sure they used to have like a, a 4%

or 5% dividend yield. But look at the

stock. It's just gone down and down, and

it's bouncing a little bit now, but it's

really come down a lot from around 2020

times. And they had to slash the dividend

because they just couldn't afford to keep

paying out such a high dividend. So the

risk is you buy— imagine you buy here and

then the stock just crashes, and then you

think, oh, it's okay, I'm still getting my

5% dividend yield. And then the company

goes, uh, sorry, but we're gonna slash

dividends. Well, now you're screwed

because now your stock is down like 20%

and you're barely even making much in

dividends. So you just kind of wasted your

time. Okay, so when do you have to buy the

stock to be able to get the dividend? So

you go onto Webull or any other app that

shows you the dividend information and you

see it says ex-dividend date. You've got

to buy the stock before the ex-dividend

date ends. So basically you should buy if

you want to get dividends from this

company, which is Warren Boots, then you

want to buy the stock before the next

ex-dividend date. So obviously it's too

late to buy it now because the last

ex-dividend date was August 18th. But you

can see that the ex-dividend date is every

3 months. So the next one will be

November, probably the 18th. So if you buy

the stock now, I mean, we're well ahead

before November 18th. We've got plenty of

time to start buying shares. So if you buy

your shares now, you'll be in time before

the next dividend date and you'll be able

to get the next dividend payment. Okay,

so you want to pay attention to this as

well on the stock market charts. You see a

little yellow or orangey D and E. E means

earnings, and this is when the company

announces its earnings. And then after

they've announced earnings, they'll

announce the dividend. And usually what

happens after they announce the dividend

is the stock will fall down. See, it's

down. Dividends announced and it goes

down. Dividends announced and it goes

down. And then dividends announced here,

it went down loads. Look. And then

dividend announced here and then it drops

by this much. That's huge. So if you're

thinking, oh, I'm just going to buy the

stock before the dividend date and then

make the dividends and I'll make money,

you probably won't. You'll probably just

buy the stock and then the stock will

announce its dividends and then the stock

will drop by loads and then you'll get

paid the dividends. And then you might

break even, but you'll probably be down.

Now, the reason why stocks drop so much

after they announce or pay the dividend is

because of this. Basically, where is

it? It says here, this is because the

company is forfeiting that money. So the

company is now worth less because the

money will soon be in the hands of someone

else. So the value of the company goes

down because they're paying out their own

money to the dividend stockholders. Then

you might be thinking, why would I bother

investing in dividend stocks if they just

lose value whenever they pay out

dividends. It's because you want to be

buying the stock maybe after the dividend.

So when the stock announces its dividends

and then the stock value drops, then maybe

that's when you want to buy and then wait

for the next dividend payment. And if

you've chosen a good company, then that

company's stock value will keep going up

and up, not just go down. If it's going

down, then you probably picked like a

rubbish company. Really what you want to

do is invest early into like a very strong

company like Coca-Cola, for example, and

Imagine you invested here at $22,

$20, and now it's like $60 per share.

Then you've just tripled your money and

you would have been collecting dividends

along the way the whole time as well. Or

McDonald's. I mean, look at McDonald's.

Really good, strong chart, strong growth

plus dividends. So the difference between

a growth-oriented portfolio compared to a

dividend-oriented portfolio is growth

stocks are supposed to be able to do way

much more growth than dividend stocks.

That's why it's called a growth stock.

And for example, companies like Tesla or

Apple is still considered to be a growth

stock. They are expected to go up by

loads, like 40% gains, 50% gains over the

next few years. That's why people invest

into it. But with a dividend stock,

you're not really going to see that. But

usually those stocks have already finished

the growing phase and now they're like

big, stable, well-established companies.

And there's not going to be a huge upside

move like 40, 50%. But there's also not

really going to be a massive risk of it

just crashing by loads either. It's

supposed to be quite a stable way of

investing where you invest in very boring

and dull companies that don't fluctuate up

and down too much, but they're going to

pay out a nice amount in dividends. It's

also very satisfying when you wake up in

the morning, you've got an email saying

your dividend payment has arrived and you

log in. It's like a big, nice green

number. And that company just paid you

this money and you didn't even have to

work for it. All the workers at the

company had to work hard selling products

and making products to earn that money.

And they just gave you a part of it,

which is pretty cool. All you had to do

was just hold onto the shares and have

faith in the company. And your, your risk

on your behalf is that if the company

doesn't do well, then you're going to lose

money because the value of your shares are

going to go down. I think really what you

want to do is I mean, you can get capital

gains growth from dividend stocks in the

same way that growth stock goes up,

because sometimes these dividend

companies, they got some bad news, they,

they made like some bad decisions

recently, or maybe something happened that

was out of their control and the stock

value, the share value of their stocks

just goes down way too much than it should

be. And then you can pick up some cheap

shares, take advantage of the good

dividend yield, and then hopefully the

company's going to rebound and it was just

a mistake. Some companies had insane

growth and people might have considered

them to be dividend stocks at one point,

like, uh, ExxonMobil, for example. They do

oil. And back in 2020, look how much it

dropped down to $27 a share, dropped down

to that twice. And at that time, I think

it had like a 10 or 11% dividend yield.

And then look at it now, it's gone up to

over $117 a share, which is like 5x,

6x. So if you, if you invested, what,

$10,000 here and you held it up until

here, your money, your $10,000 would be

now over $50,000, plus all of the

dividends you would have collected along

the way. You would have turned that

$10,000 into nearly $100,000 now. So

that's pretty good for a company that's

not really considered as a growth stock.