Generate Income While you Sleep With This Investing Strategy
Wise words from one of the greatest investors of all time Warren Buffet states, “if you do not figure out how to make money while you sleep, you will work until you die.”
Top 5 Dividend Stocks to Keep on Your Radar
Investing in dividend stocks on the stock market is an amazing way to build wealth over time and generate consistent cash flow without doing practically any work.
Regardless of what the stock market is doing, strong companies that pay a dividend will continue to provide you with cash flow even if the stock itself is selling off. Many dividend investors use a ‘DRIP’ strategy which stands for dividend reinvestment plan.
The idea is to take these cash dividends and buy more stocks with them, creating a snowball effect. Once you are near retirement, you can turn off DRIP and simply live off the cash flow provided by these stocks if you wish to do so.
A popular metric to consider is dividend growth over long periods, which is often referred to as dividend growth investing. Companies that are confident in its future earnings potential will continually increase its dividend payments each year to keep its investors happy and provide confidence that they will continue to grow moving forward.
1. Microsoft
Microsoft is first on the list as it is an amazing company with plenty of capital growth potential and they provide a solid dividend yield of around .84%. Compared to the tech stock average dividend yield of 1.37%, Microsoft’s is a bit lower, but this is easily compensated by the revenue growth potential.
They have a wide arrangement of products including gaming, Microsoft Office, and of course Microsoft Windows. Essentially anybody who uses a computer is constantly utilizing products created by Microsoft which makes them one of the safest long-term investments going forward.
2. Visa
Imagine any time somebody in the world makes a credit card transaction you get a small portion of the profits, that is what it is like to own Visa stock.
They pay out a decent yield of about .69% which is not amazing, but they have been increasing the payment consistently for over a decade signaling a promising future. This yield is quite low compared to the financial sector average of over 3%, but higher yields do not always mean the stock is a better investment.
Aside from the passive dividend cash flow, Visa is a safe and reliable company that should continue to grow its revenues year over year.
Its business model is superb and if people continue to utilize credit cards there is no reason why Visa should be hindered.
They are also attempting to get into the crypto space, which has proven to be a fee-generating machine for those who facilitate transactions.
3. Costco
Even though e-commerce has made a huge impact on the retail side of shopping, Costco stands out from the crowd in the brick-and-mortar space because of its amazing wholesale prices and recurring membership fees.
Unlike other retail stores, customers are incentivized to remain loyal to Costco since they already pay a membership fee. Additionally, they offer better prices so customers would simply be shooting themselves in the foot by shopping at any other store if they are a Costco member.
Its dividend yield is about .57% which is a bit low when compared to the consumer staples sector average of 1.89%, but its stock has been growing at an amazing rate to compensate for it.
4. JPMorgan Chase & Co
The banking sector is another one to keep an eye on for amazing dividend payers. JPMorgan Chase is one of the best banks on paper and is a staple for any dividend portfolio.
Given that people continue to take out loans and utilize money in general, major banks like JPM will continue to thrive.
In addition to generating reliable revenues, they pay out a solid dividend yield of over 2% annually. This is a great yield, and it has been increasing for over a decade, signaling they are confident in its future growth potential.
JPMorgan pays out a dividend yield of about 2.86% which is right on par with the financial sector average of 3.18%. Aside from the dividend, they are the largest bank on paper with a market cap of close to $3 trillion making them an amazing investment choice.
5. Pfizer
Biotechnology companies are generally not the best to mess around with as they are highly news dependent. However, companies that have been established for a long time and have more predictable income like Pfizer can be a great investment.
Given the circumstances of Covid-19, many investors looked to capitalize on the companies providing vaccines to slow the spread. Since Pfizer is not just relying on one clinical trial to stay in the biotech business, they are a great choice for anybody looking to invest in the industry.
Its dividend yield is about 2.95% which is fantastic when compared to the healthcare sector average of 1.58% providing a great reason to be bullish on Pfizer.