A Beginner’s Guide to Dividend Investing

This guide has been a long time coming for several reasons; I’ve always wanted to

release a guide that is going to help people get started investing. Not only just investing, but

investing for dividends as well. It has become a very underrated and underappreciated way to

both grow wealth and increase cashflow. In a world that is obsessed with trading and instant

gratification, dividend investing takes the opposite approach. I like trading, don’t get me

wrong. It’s just that most will end up losing money because they don’t take the time to learn

the skills or have the emotional skills to handle what trading entails. It is a great means of

income for those that do, though.

Dividend investing is the long game. It is building up a war chest of cash flowing stocks

that still appreciate and increase your overall wealth as well. Your dividend stocks pay you no

matter what. Do they pay you if you are at your 9-5? Yep. Do they pay you if you are on a

beach in Maui? Yep. How about on a tour of Ireland? Yep. You get the picture. Dividends are

the ultimate form of cashflow. Once you are in, they pay you for a lifetime as long as you stay

in.

Cashflow isn’t the only thing that you get! You will ultimately get close to a 10%

appreciation average per year. This can vary from year to year, but it will average out. Holding

good companies for many years will do wonders for your overall wealth. Not only will they

appreciate, but they will also increase their dividends often. That means you won’t have to do

anything to get a raise. They just do it! Isn’t that nice?

 I’ve been pounding dividend investing into the heads of all my Twitter followers since I

joined back in January. Its ultimately the end of the trickle-down effect for all my money.

When my businesses or hustles produce profit, I always reinvest some of that profit to continue

to grow the business so that it generates more cashflow. The other side to that is that I always

park some of that profit into dividend paying stocks and that produces an additional means of

cashflow. It is the most passive form of any cashflow that I have. I always reinvest dividends as

that will increase my cashflow even more. I’ve stated it on Twitter multiple times, and I will say

it here as well. My goal is to have a cashflow produced by dividends that covers all my living

expenses. Once I have hit that part in my life, I will know that my cashflow system has paid off

and I have truly stepped into the realm of true financial freedom.

Now, it’s not in my DNA to back off and slow down once I get to that point. That is just

an indicator to me that 100% guarantees that my life and my time is mine. If I want to take my

family to Disney for a month, I can do it because I still have a constant stream of cashflow

coming in to ensure our financial wellbeing. I’ll continue to grow my businesses and other

means of income once I’m at this point. I’ll never be able to stop building. I just can’t. It’s

always going to be apart of me to want bigger and better when it comes to business and

personal finance. I encourage you to take the same mantra. It will keep you driven and chasing

after the goal.

I hope that as you go through this guide it will help a ton. I will have a FAQ section at

the end of this book. It will likely answer a lot of your questions if you are new to this. If a

word or topic comes up that you don’t know then pause where you are at and check the FAQ.

If I’ve not answered it in the FAQ then check Google.

 I Want to Dividend Invest… Where do I Start?

I get this question all the time. And I get it! If you have no prior investing knowledge it

can be a very confusing world when figuring out where to start. Google is filled with great

resources but also the quantity of information can be overwhelming. That’s why it can be very

nice to have someone who will spell it out for you and help you get going. I hope that this

section of the book will do that for you. Getting started is the most boring part, honestly. Once

you are up and running you will enjoy every part of investing!

The first thing that you must do if you are wanting to invest is get set up with a broker.

Getting set up with a broker is very similar to getting set up with a bank. You will have to

provide them with your personal information and all that jazz. You will await approval and

should be good to go. Now you may ask… what broker should I use?! If you are in the United

States, I would recommend Robinhood™. All you must do is download the app and complete

the set-up process. If you are in a country outside the United States, I’m going to have to ask

you to put Google to work. Do some searching, read some reviews, and make a selection.

Once you’ve selected a good and reputable broker, you must link your bank account to

your broker account. It’s a simple process that allows you to move money to and from your

investing account. Once again, this step could take a day or two to confirm the link between

the two accounts, but once completed you are ready to begin your process into dividend

investing.
 Before You Make Your First Purchase…

You are now officially set up with a broker and ready to make your first purchase.

Before you do that, it is important to understand a few things about the stock market.

Theoretically, you must be willing to lose anything that you invest into the stock market.

Investing is considered a speculative risk that could result in loss or gain. It is important not to

invest with any money that you need to live on. If you need that money to live on, then

investing will be nothing but a negative and stressful experience for you and that shouldn’t be

the case. If you stick to investing what you can live without then you will enjoy the process and

enjoy building your account into a dividend empire. So, moral of the story… Understand that

anything you invest could be lost. That is not the norm, but it could happen.

You also have to figure out what kind of investing style that you want to have. If you are

like me and want to be super involved and hand pick your stocks, then that is great! I will help

you get started in that realm. If you want to take a more passive approach it may be wise for

you to invest in ETF’s which are exchange traded funds. These are basically a whole basket of

stocks bundled and traded under 1 ticker symbol. These are still fine and will provide normally

a market average return and will often pay a small dividend as well. These don’t typically offer

the benefits that individual stocks do when it comes to buying opportunity and taking

advantage of market volatility. You can also buy an index fund that mirrors the whole market.

They generally capture very close to the same return as the overall market.
 I won’t go too much into ETFs or index funds because that isn’t what I am writing this

guide about. I am writing this guide for all of those who are interested in dividend investing &

individual stocks. I hope that this will help you understand a bit more about investing into

dividend stocks for both appreciation and cashflow!

My Investing Strategy Explained

My investing strategy is quite simple. If you are looking to start investing for dividends

and cashflow then this is a section that you should really pay attention to. I will help you

optimize it so that you can get the best dividend yield possible and the best potential for price

appreciation in the stock you buy. I stick to these principles as closely as I can and rarely

venture from them! (If you want more access to my strategy and to know exactly what I am

doing & when I am doing it-- please be sure to check out the last page of my guide)

I initially create a watch list of valuable stocks that I am interested in. These stocks all

pay dividends, and most tend to increase their dividend yearly. I now have a list of stocks in my

broker that I can keep an eye on daily. It allows me to see what stocks are up and what stocks

are down. I like to buy the good companies that are down on their luck for whatever reason.

As long as that reason isn’t something that affects the long-term value of the company then I

am all about adding stocks when they are beat up. To paraphrase 2 famous Warren Buffett
quotes: “Be fearful when others are greedy and be greedy when others are fearful” and “When

it’s raining gold, put out the bucket not the thimble.”

Its important to realize that trait of opportunity. We are looking to buy stocks that are

down on their luck but not broken. Usually these stocks will come roaring back within months

or sometimes a year’s time. I’ve seen it happen time and time again. The bonus is twofold.

Not only are you getting all the appreciation in the share price, but you are also getting the

dividend yield at a much more attractive area. To show an example:

John buys 1 share of AAA for $100 per share and will get a 1% dividend yield on that

purchase. That means the stock will pay John $1 per year for every share he owns.

Sally buys 2 shares of AAA for $50 when it was down on its luck 2 months later. Sally

will get a 2% dividend yield because the stock still pays $1 per share owned and Sally received

the same benefit for half the price.

Fast forward 6 months and the stock has recovered back to $100 per share. Sally has

now doubled her initial amount of money and gets more dividends than John on the same

amount of money spent. This is because Sally timed her buy when the stock was low, and John

did not. This is the exact strategy that I am trying to get everyone that follows me to

implement.

If you can repeat this pattern over time and take advantage of market dips, you will

have a great chance of outperforming the market. You will have some losers along the way.
Sometimes stocks never recover. It happens. It’s part of the process. Your winners will

outshine your losers, though. I aim constantly for better than market returns.

The next question I get is: “What do you do with the dividends?” To make it simple, I

reinvest them all. I have not yet taken a single dollar and spent it personally. I have put it all

right back into stocks that will pay me even more dividends. I don’t, however, have it set to

automatic reinvest. I like seeing that cash come into my account and then I will redeploy it as I

see fit. I like to use the dividend cash to invest into what I feel is the best opportunity at the

time. If you prefer to put your account on autopilot and have it reinvested, there is absolutely

nothing wrong with that. It’s the same principle. It is exchanging your money for more

dividend paying shares of good companies and that is something I can get on board with.

I also get the question: “When should I sell a stock?” If you are following my strategy,

then the answer will be rarely! Let me explain. I buy stocks that I plan to hold for a very long

period. I buy them to produce a stream of cashflow for me year after year. If my original thesis

for buying is still intact then I will continue to hold the stock and collect the dividend. If I am

buying good stocks, then I should also get very solid appreciation on the stocks year after year.

This produces a good combination of cashflow and capital appreciation. That is the ultimate

goal. If you can increase your net worth and cashflow at the same time, then it is a winning

combination and the goal has been attained.

Another question is: “How do I determine what are good companies?” That is the

toughest one to answer in writing. It’s a combination of a few different things. The first thing I

look at is the health of the company. How are they financially? Are they continuing to increase
sales and profitability? I also look at their dividend yield, dividend payout ratio, and history of

dividend increases. This tells me if a company has a good history of now only continuing to pay

their dividends each year but continuing to increase them each year. Getting a dividend

increase each year is so important. It will raise your yield on cost yearly and that initial amount

of money that you spent will continue to make you more and more money as the years go on.

That is an important key to what I do. The longer you practice this strategy, the sweeter it

becomes.

You can start by looking at this list of Dividend Aristocrats. These are companies that

have increased their dividend every year for the last 25 years.

3M (NYSE:MMM) Industrials

Aflac (NYSE:AFL) Financials

AT&T (NYSE:T) Communications services

AbbVie (NYSE:ABBV) Healthcare

Abbott Laboratories (NYSE:ABT) Healthcare

Air Products & Chemicals (NYSE:APD) Materials

A.O. Smith (NYSE:AOS) Industrials

Archer Daniels Midland (NYSE:ADM) Consumer staples

Automatic Data Processing (NASDAQ:ADP) Information technology

Becton, Dickinson & Co. (NYSE:BDX) Healthcare

Brown-Forman (B Shares) (NYSE:BF.B) Consumer staples

Cardinal Health (NYSE:CAH) Healthcare

Caterpillar (NYSE:CAT) Industrials

Chevron (NYSE:CVX) Energy

Chubb (NYSE:CB) Financials

Cincinnati Financial (NASDAQ:CINF) Financials

Cintas (NASDAQ:CTAS) Industrials

Clorox (NYSE:CLX) Consumer staples

Coca-Cola (NYSE:KO) Consumer staples

Colgate-Palmolive (NYSE:CL) Consumer staples

Consolidated Edison (NYSE:ED) Utilities

Dover (NYSE:DOV) Industrials

Ecolab (NYSE:ECL) Materials

Emerson Electric (NYSE:EMR) Industrials

ExxonMobil (NYSE:XOM) Energy

Federal Realty Investment Trust (NYSE:FRT) Real estate

Franklin Resources (NYSE:BEN) Financials

General Dynamics (NYSE:GD) Industrials

Genuine Parts (NYSE:GPC) Consumer discretionary

Hormel Foods (NYSE:HRL) Consumer staples

Illinois Tool Works (NYSE:ITW) Industrials

Johnson & Johnson (NYSE:JNJ) Healthcare

Kimberly Clark (NYSE:KMB) Consumer staples

Leggett & Platt (NYSE:LEG) Consumer discretionary

Linde (NYSE:LIN) Materials

Lowe's (NYSE:LOW) Consumer discretionary

McCormick & Co. (NYSE:MKC) Consumer staples

McDonald's (NYSE:MCD) Consumer discretionary

Medtronic (NYSE:MDT) Healthcare

Nucor (NYSE:NUE) Materials

PPG Industries (NYSE:PPG) Materials

Pentair (NYSE:PNR) Industrials

People's United Financial (NASDAQ:PBCT) Financials

PepsiCo (NASDAQ:PEP) Consumer staples

Procter & Gamble (NYSE:PG) Consumer staples

Roper Technologies (NYSE:ROP) Industrials

S&P Global (NYSE:SPGI) Financials

Sherwin-Williams (NYSE:SHW) Materials

Stanley Black & Decker (NYSE:SWK) Industrials

Sysco (NYSE:SYY) Consumer staples

T. Rowe Price Group (NASDAQ:TROW) Financials

 Target (NYSE:TGT) Consumer discretionary

United Technologies (NYSE:UTX) Industrials

VF Corp. (NYSE:VFC) Consumer discretionary

Walgreens Boots Alliance (NASDAQ:WBA) Consumer staples

Walmart (NYSE:WMT) Consumer staples

W.W. Grainger (NYSE:GWW) Industrials

Chart provided by www.motleyfool.com

This list is a great launching point for building your watch list around good dividend

paying companies. There is a very strong chance that the companies in the list above will

continue to increase their dividend each year to return cash back to shareholders. I own a lot

of companies on this list and hope to own most if not all of them before too long. Use this list

to your advantage. Add them to your watchlist and pay attention to what is going on with

them. There will always be those that have a great year and always be those that have a bad

year. Take advantage of the volatility and enjoy!

FAQ

What is a Dividend? - a sum of money paid regularly (typically quarterly) by a company

to its shareholders out of its profits (or reserves).

 What is a dividend yield? - The dividend yield is the ratio of a company's

annual dividend compared to its share price.

What is a payout ratio? - payout ratio shows the proportion of earnings paid out as

dividends to shareholders, typically expressed as a percentage of the company's earnings. The

payout ratio can also be expressed as dividends paid out as a proportion of cash flow. The

payout ratio is also known as the dividend payout ratio.

What is a stock watchlist? - A watchlist is a list of securities monitored for potential

trading or investing opportunities. Investors track the list to analyze price movements and spot

trading opportunities.

How are my dividends paid? – Generally, your dividends will be automatically credited

as cash in your investing account unless designated to automatically reinvest.

What is an ex dividend date? - The ex-dividend date or "ex-date" is the day the stock

starts trading without the value of its next dividend payment. Typically, the ex-dividend date for a

stock is one business day before the record date, meaning that an investor who buys the stock

on its ex-dividend date or later will not be eligible to receive the declared dividend. Rather, the

dividend payment is made to whoever owned the stock the day before the ex-dividend date.
 How can I find out when my dividends will be paid? – A simple answer to this is to

google it. Companies generally only announce when they are paying about a month ahead of

time. If you are interested, you can usually find that with a google search. Nasdaq.com is a

great one to use to find that information.

How do I know what stocks pay dividends? – Once again, the easiest way to do this

is to ask Google. Looking up companies on Yahoo Finance is a good resource as well to find

out this information about a particular stock.

How much money do I need to start investing? – Any amount! The key isn’t what

you start with, but that you are consistent in adding new money as often as possible. If you

have $100… great! That will be enough to buy you a good dividend stock or two. Just continue

to add money as it becomes available and you will see it begin to grow!

This guide should help in getting you started dividend investing and answer a lot of

beginner questions. I hope that my strategy makes sense to you and can help you maximize

the time that you are buying your stocks. I am always available for questions on Twitter and

hope that this will get you jump started and going on your dividend investing journey!
 Patreon™ – Caleb Gregory Investing

I’ve decided to launch a Patreon page for my followers who want more information and more

access to what I am doing. For as low as $7 per month you can have access to the exact stocks I am

buying in real time, their dividend schedules, and exclusive Patreon updates!

For $15 per month you will get access to all the above but also receive a minimum of 1 teaching

video per week on investing, dividends, or both! You will also get an in depth writing on why I am

buying each stock that I am buying! There are also more premium tiers if you are interested! I have left

the link below. You guys are getting exclusive first access to my page as I have just started it and haven’t

made it public yet. Check back daily if you join! I think if you love my twitter content you will love the

amount of information inside of my Patreon! Thanks again!

Again, I will continue to create all of the same content on twitter. But for those of you

interested I will go more in depth on my Patreon,

https://www.patreon.com/Calebgregoryinvesting