The MoneyByRamey Dividend Portfolio

I truly believe that the modern stock market is one of the greatest inventions in the history of humanity.  By its existence, everyday individuals, no matter what their race, creed, societal standing, or stature in the world, can own the greatest companies the world over.  

If you want to own a piece of Apple ($AAPL), the process is very simple: you open a brokerage account, pull up the stock ticker, input the number of shares, confirm execution price, and voila!  You now own a piece of a fantastic company at a (hopefully) fantastic price point. 

We routinely hear stories about the office administrator, though not a high-earner by any means, sustained great discipline over a period of many years and decades, and as a result, retired with millions of dollars in the bank.

Though stocks will have their ups (bull market) and downs (bear market) as Mr. Market often misvalues stocks, routinely investing in publicly traded companies has represented the single greatest wealth generator over the last hundred plus years.  In no other time in human history has the everyday individual been able to own shares of the largest companies the world over. This is a beautiful thing. 

I personally believe that selecting companies for investment does not need to be a complex matter; the simplicity of owning great companies at great prices is the way to Financial Freedom.  

When you are first starting out on your journey, the concept of early retirement through dividend investing might seem like a distant and unattainable goal.  However, by implementing the dividend investment strategy, you will begin to see how that distant goal is indeed an attainable reality. How? By purchasing solid, dividend-paying stocks at excellent price points.  

So why dividends and not growth stocks?  I will be the first to admit that I am not a great judge of a stock’s growth potential.  Or better yet, I believe that growth stocks can be overvalued and I am not sure what a solid entry point happens to be.  

There are investors for whom the growth investment strategy is their bread and butter; to them, I say ‘kudos’.  After all, there is more than one way to successfully invest.  

I do happen to own some investment funds that specialize in investing in growth stocks.  This particular strategy, where I invest in solid dividend income stocks, and I outsource the analysis and investment into growth stocks to others, works very well for me.  

However, when it comes to investing for the long-term, dividend paying stocks on a dividend reinvestment program is a very apt combination.  When these stocks are on DRIP, a runaway ‘snowball’ effect is created through continually rising dividends and growing positions.  

A forward momentum is achieved, which if investing in the proper stocks, cannot be halted.  Any growth becomes exponential, where compounding interest, commonly referred to as the eighth wonder of the world, takes its effect in the form of share accumulation. The results are truly amazing.

It is from this phenomenal growth that a dividend income investor can achieve the dream of becoming Financially Free.  

Financial Freedom: The End Goal 

By investing in dividend-paying stocks, the investor is making money while he or she sleeps through dividend payments. It is only by this concept of having your money work for you that you can truly achieve Financial Freedom and, as a result, time freedom.  This quote by Warren Buffet sums up this principle beautifully:

“If you don't find a way to make money while you sleep, you will work until you die.”

Warren Buffett

I am an advocate of working hard in your day-to-day life. Whatever our hands find to do, we should do it with all of our ability and determination. By trading our hours for work, we can find a meaning and a purpose in our lives beyond just constantly being bored or entertained. 

With that being said, we do want to reach a point where our money is making money for us so that we no longer need to trade our hours for work.  When actively working becomes a choice and not a need, life meaning reaches a whole new level. You will then be free to pursue whatever your hobbies or purpose might be whether that is painting, spending more time with family, coaching, writing, etc. This is where a well-invested dividend portfolio comes into effect.

When you invest your hard-earned capital into dividend-paying stocks, you are securing a steady income stream for the future. The idea is to have these companies pay you a routine dividend, reinvest that dividend into buying more shares of stock, then rinse and repeat until you reach a level where you are ready to turn the ‘dividend cash spigot’ on.  Once you reach this level, the goal is to have the dividends covering the expenses in your life and providing some extra cash for life fun.      

If your analysis proves true and the company is a good purchase at the current price with a routine dividend payment, then all you have to do is sit back and receive a consistent dividend for each share of stock that you own. 

Not only will you be receiving a stable income, but if the company does well and elects to increase the dividend, you will be getting a raise as well!  

The concept of living off dividend income needs only to apply to your current situation; if you are happy with having ‘X’ amount of dividends paid, whatever that means for you, then you are in a great place.  

Perhaps your goal is to make enough to cover your living expenses so that you only need to work to afford food and entertainment.  Perhaps you want to have dividend income cover all of your life’s expenses. Whatever your case may be, with a dividend investing strategy, you seek to build and maintain your passive income through dividend producing stocks.  

Is It Possible to Live Off Dividend Income?

Living off the income generated by dividends is not only possible but it is possible for you.  

Is it a long and challenging road to get there?  Yes, most definitely.  

Does it take courage?  You bet it takes courage, persistence, and determination.  

But if you stay diligent and continue on the forward path, you can realize success!

In 2018, when I first started my MoneyByRamey.com journey, I had $566.30 in annual dividend income. I remember looking at that number, wondering how I could even get it to be at a level where it could sustain my day-to-day living expenses.  After all, $500 just doesn’t get you very far in this world.  

However, my view was wrong.  Instead of seeing $566.30 as a number set in time, I needed to see the potential behind that number.

The $566.30 was merely a starting point for the runaway growth that I was ready to experience.  The more I invested, the quicker this number would grow. Instead of being in a position of buying stocks, hoping for appreciation, then selling my assets to make a living, I was earning real income and reinvesting that into accumulating more shares on a routine basis.  

Through these dividend payments, I continue to grow my yearly income and hope to never have to sell a single share of the great companies that I own.