At some point in my investing journey, dividend investing became something that I identified with.
Dividend investing has a lot of appeal, and I think the reason is that people likes to be validated that they are slowly getting a cash flow payout from their investment.
This has a lot of similarities to the Asian concept of owning land and leasing out to farmers to grow crops and living off it. It is a very passive form of income.
At this stage of investing, I wouldn’t compartmentalize the way that I invest to be called dividend investing. I prefer to call it active stock investing simply because I invest in stocks and I take an active approach.
However, the role of dividends plays a big role in my consideration:
- It is the cash flow return that I get for waiting for an undervalued stock value to be realized. One good example are the cash flooded company Cosco Shipping International in HKSE. They have been in that position for quite some time and you don’t know if value is going to be unlocked and when will that happen. Having a good payout and a supportive business allows you to stay in the stock
- It helps you to inspect if the business is more of a fraud or less of it. This is simply a measure of how much the management takes from the minority shareholders versus what they paid out
- It enables you to determine the valuation. When compare against the peers, it allows you to determine the stock’s relative valuation versus its peers
- It allows you to determine its posture between growth and maturity
Perhaps the main difference is that I use the dividend payout as an indicator, as well as a cash flow remuneration while you are attracted due to its cash flow payout.
There can be a particular danger if you are enamored with the dividend component. If I need $20,000/yr, I could just put it in APTT and I would only need $200,000 to achieve that.
There are some deeper knowledge that, if you didn’t know that you need these knowledge, it could be dangerous. And that danger can very well be an impairment of 20-30% of your capital. This will be difficult to gain back when the cash flow do not support the dividend payout. It will take many many (and I say many) years to recover.
On $200,000 that is $60,000 impairment.
These are not scary case studies that only occur to a small subset of people. As I have written about this in a previous post, APTT and Rickmers case study is common, attractive and can turn out to be rather unfortunate.
The high level solution: Focus on having a good dividend investing system.
By that it means:
- having good processes to prospect stocks, identify good, mediocre and bad ones
- continue to learn about the craft
- having a good system when you should buy, how much to buy, when you should hold or sell, when you should add on
Dividend Machines Reopens
If you wish to learn from me, you can take a look at my resources section.
It contains curated resources on:
- Building a good wealth foundation
- Learning about REITs
- Active Stock Investing
- Financial Independence and Retirement
These are usually not very comprehensive since I don’t kill myself to create a bunch of modules for you guys.
If you wish to learn about dividend investing, there are a few training centers that offer affordable classes.
My friends Rusmin and Victor started this course some time ago, focusing on providing the necessary resources for investors who wants to invest in dividend stocks to be well equipped to deal with that.
The course is conducted in an online manner.
There are 5 modules that brings you from a raw investor to one who knows how to systematically prospect stocks for dividends:
- The first module gives you an idea the appeal of dividends and why you should invest this way
- The second module is important. It lays the framework that this way of investing is not unlike any other investing in that it requires you to have a good wealth foundation in order for you to succeed (and many just jump straight into investing oblivious that these aspect are important)
- The third module goes into the nuances of investing in dividend stocks, according to Rusmin and Victor. Here they lays out their idea how to select the stocks, what to watch out for, why do they prefer some metrics over the others
- The fourth module goes into the Mumbo Jumbo of REITs, which happens to be a popular subject.
- The final module ties everything together and shares with you how to manage the stocks from a portfolio perspective.
The curriculum is online, which means you do not have to rush to classes when your boss wants you to work longer. Or when your children suddenly fall sick.
It is more flexible for the modern employee.
Questions & Answers and Discussions
The best way to learn is to clear your doubts.
As you critically think what is right and what is wrong, you have more doubts. As each of these doubts get address, you gain confidence in how you an go about executing a plan to create a dividend portfolio.
In the platform, you can access to Rusmin and team who will answer your query. You can also grow by paying attention to what your fellow trainees queries and the answers to them.
Unlimited All Access Workshop
I realize from my friends that people still prefer the human interaction.
While technology can provide such an advantage to make learning interactive and flexible, people still prefer to interact in a face to face manner.
Dividend Machines will organize all access workshops that allows you to talk with the trainers and revisit the curriculum.
It is a full day event where you can interact with trainers, who will revisit the action plan. The trainers will highlight certain more important nuances of the action plan that you might missed out (if someone keeps repeating something, it might sounds lame, but its probably important enough to keep repeating!). You can also ask them what you are unclear about.
In 2017, Rusmin and Victor hosted 8 such sessions last year and if you are a Paid Member, you have access to these workshops.
However, these workshops is on a first come first serve basis so when they are available do register them early.
Dividend Machines is Open for a Limited Time
You can sign up for Dividend Machines through this link.
As with past Dividend Machines, you can only sign up within a limited duration. On last count you should have 19 days more, as it will close on 18th Mar, 11:59 PM.
During this time frame, you can enjoy the course fee of US$297 (SG$389)
Given that you pay this one time fee and have access to content that will be updated annually, and that have access to trainers virtually and live, this is a very good deal.
And if after 30 days you are not satisfied with how the course turned out, there is an iron clad Money Back Guarantee. This gives you a piece of mind to sign up.
Just a heads up to readers that this is a Sponsored Post. I believe you will gain value out of Dividend Machines if that is what you are leaning towards in terms of wealth building at a good price range. I do not gain any commission if you click through the links. Let me know the feedback for the course so that I can improve the recommendations.