Category Archives: Dividends

Victory With REITs?

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These past three almost four years, I’ve been investing in REITS (Real Estate Investment Trusts) and so far I’m been very happy with them, and here’s why…

I’ve almost recaptured my principal that I invested in the REITs!  If all goes well, sometime in the 2 years, I’m have doubled my money!  Now if you look at my investment in the REITs, it’s not impressive… For example, the $10,000 I have invested in my largest REIT position and it’s stock value is only up to $10,044 not very impressive huh, but after you factor in the dividend stream that I also received, my gain is really almost 75% of my initial $10,000 purchase price!  About a 175% in 3.5 year, not too shabby huh!  I guess that’s what a near 20% dividend can do for you over a few years span of time!

While I’m not really bragging, it has been nice!  Most people (including myself) thought that I was gambling, and to a certain extent, they were right.  If the Fed (Mr. Ben Bernanke) decided to raise interest rates, I would have possible been hurting, at least a bit…  But based on the economy and more importantly the world economy, I found that scenario unlikely!

If Mr. Ben Bernanke (aka the Fed) keeps rates flat, I don’t see why I wouldn’t be able to double my money allowing me to recoup my initial investment dollars.  At that point, I might just let it stay invested in the REIT since it’s now considered the “the house’s money” (a gambling saying that means I’m playing with the casino’s money since I have all of my principle back).  Since I doubt that the REITs that I’m invested in will go to zero, I’ll just let them ride and not worry about it.

Now the big question is “Would I invest in REITs today?”.  And my answer would be it depends, but maybe for the next 1/2 year to 1 year.  It really depends on the Fed (Mr. Bernanke) and what they are planning to do with the interest rates.  As long as REITS can afford to pay out a decent dividend, it seems like a decent, although much more risky gamble.

While I consider the dividend income from the REIT’s that I’m in a victory, I’m not recommend the same approach as a strategy today…

Cheers,

MR

 

Disclosure: I have REITs and I’m currently long on them!

 

A Different Approach to Giving – Personal Charity

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My Personal Charity

Money Gift

 

As Christmas grows near, many times (including this year) I don’t have an extra $1000 or even $100 to give to charity.  At this point in my life I don’t have enough  or make enough to give that hard-earned money away, especially after buying presents for others.  Still, I would like to help people in need out, especially near Christmas…  I could give to the Salvation Army (and actually I do), but I’ve been thinking that I would rather do something on a more personal level, and since I like dividends, I thought why not invest my money in some dividend stocks and use the dividend for charity!

Charity Funded By Stock Dividends

Using dividend stocks to fund charities could also serve as an unofficial emergency fund in case of a downturn in the economy or something horrible happen to me like the possibility that I would lose my job.  While it might not be a lot of money, every bit helps!

The best thing about giving money to a Charity (or Charities) with the dividend payments from dividend stocks is if the stock has a consistent history of increasing dividend payment, each year the payout from the dividend (minus the tax consequence) would increase!  So each year the payout would become more and more, not to mention that you buy more shares of the stock every year too!

Starting A Personal Charity, A Small Beginning

Okay, now let’s look at the details…  Let’s say that you were able to save $1,000 per year for the “Dividend Stocks for Charity” fund.  So is the dividend payout came to 4%, that would be $40 for the first year (I’m skipping the taxes here because the amount is so low).  There isn’t too much you can really do with $40, except:

  • Give the $40 to a few (or one) favorite servers (waitress, or similar) that you know that always makes you enjoy your time at the location they are working at!
  • Drop the money in a Salvation Army Bucket…
  • Anonymously mail some deserving child (or family) that is always nice but may be having trouble financially.  Perhaps address the mailed gift from Santa, or “A Friend That Knows the Good You Do”, or something similar…
  • The Salvation Army’s kettle is always a good option for charity, if you are too busy.
  • Perhaps there is a community project that is accepting donations, or a specialized community group that would benefit…
  • Or you could go out and buy toys for the “Toys for Tots” program.

The thing is that you can do anything your want with the money!  You wouldn’t be restricted to just organized charities!  In fact 100% of your personal Charity fund could go directly to the cause that you want to give it too.  With large business charities, a lot of the money goes to support the running of the business of the Charity.  Sometimes more than half the money you would contribute wouldn’t even make it to the cause that needs the charity.

A Personal Charity just Feels Better!

For me personally, I prefer to have feedback and accountability for the money that I give away to charity!  With my own personal charity, I’m able to see the results of the money that I gave away.  If I decided to buy a child a bike, I can roll the bike to the doorstep where the child lives, that way I know the child received the gift, and I might even be able to see such a child riding that bike someday.  I’m sure that would be an awesome feeling!

Of course we would still contribute the our regular “business organized” charities also…

Here’s wishing you the best of holidays this year!

MR

Dividends Paying Expenses – My Thoughts

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A friend at work asked why am I working so hard to saving dividends to pay for my lunch expenses.

Cross-over point to the positive

He was actually referencing the fact that I don’t go out as much because of my experiment called: Lunch Dividend Experiment.  He thought it was a risky move because what happens if the stock stops paying dividends or goes belly up and I lose my entire investment in that company.

Well, my friend is only seeing part of the equation.  The part he forgot about was that if I paid for expenses with my earned income, my money is gone after I pay for the expense.  However, with stocks that pay dividends, I have the opportunity to keep my initial investment, only spending the dividend portion.  It’s true that such stocks won’t increase in value as fast that way, but the idea is someday that I will increase my investment in that stock too, once the dividend payout is more than what is required to pay for the expense and taxes.

At the very least, I’m not spending my earned income, never to see that money again!

That said, I won’t be able to use dividends to pay my mortgage (if I still had one), but everything else is fair game!

Almost all of my dividends are overloaded in purpose.  By this I mean that I’ll use my dividends for a want, but if something happens, I’ll switch it to cover a need. For example, I’m working on building up my dividend payouts so that they can cover future vacations, or at least help pay for vacations, but if some disaster happens like I’m unemployed, that dividend stream will go to other more important things such as food or paying my real estate taxes.

That the beauty of dividend goals!  Just because they are ideally focused on one goal, doesn’t mean that they can’t be switch to a new high priority goal if the need arises.

Bests,

MR

Creating a Blogging Dividend Stream

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Blogging Dividend Stream

During the first few months of blogging, I was constantly learning and searching for any articles about blogging.  On one particular blog, I read that a blogger was making big bucks ($5,000 in one week), but when she showed her Adsense account, her balance was zero.  Being a financial blogger, this raised some red flags for me!  Later the blogger posted an article about not having enough money to pay the taxes on his blogging income (which was well over $50,000).

This is when I decided to come up with a solution so that I wouldn’t spend all of the money that I hope to make blogging.  Luckily? I don’t have much money from blogging yet, but with what little I have, I decided to purchase stocks with dividends, then use those dividends to cover my expenses with blogging.  The idea is that I’m saving the money I make from blogging, and then buying dividends stocks (I only bought 1 stock, so far), then using the money from the dividend provided by the stocks to expand my online and offline businesses (mainly blogs at this point).  That way blogging doesn’t cost me any more money, and I’m growing a new financial asset at the same time.  Since I work full-time and don’t need to use the money from blogging for living expenses, it’s a relaxed pace with blogging for money, at least for me.

So now your probably wondering how much my dividend stream is per month?  Well (drum roll), it’s $40 dollars.  Doesn’t sound like much huh, but considering my normal monthly cost for blogging only runs about $13 per month, $40 is a windfall.

So now that I have my monthly expenses covered, I’m focusing on making the dividend stream grow, but at the same time I want to use some of the money from blogging to travel more.  So starting next year, I’m going to use at least 50% of the money I make from blogging to travel, and then I’m going to invest the other 50%  into stocks that have dividends.  Then each year I’m going to try to shift the percentage of blogging money that I use for travel down.  So two years from now, perhaps I’ll only use 45% to travel, then three years from now I’ll only use 40%, etc…

Blogging is a hobby that I never imaged could be as fulfilling both mentally and financially at the same time.  Blogging for me is a win-win, especially since I’m able to build up a dividend stream that covers the expenses of running the blog!

Bests,

MR