• Dick McEvoy

Educate Yourself on the Basics of Investing in Corporate Stock Dividends

In today’s uncertain times, and with our nerves wracked by worries over when our consistent income (job) streams will resume, we have seen how Bonds can provide a much needed, recurring income stream. However, Bonds aren’t the only way that investors can generate income that they can count on.

Corporate Stock Dividends provide regular – usually quarterly – payouts from investing in a company’s equity. Approximately 55% of U.S. Households report that they own stocks (Gallup), and a large percentage of this stock ownership comes by way of Stock Index Funds and mutual funds. The vast share of this U.S. Household ownership takes place in people’s 401K and IRA Retirement programs. Investments such as the S&P 500 Index funds offered by all of the large brokerage houses (i.e. Vanguard, TD Ameritrade, Fidelity and others) make a ton of sense for several reasons:

  • The average annualized return of the S&P 500 Index was more than 11% over the 40 years,

  • Active fund managers (people who run various mutual funds of other “select” groups of stocks, in an effort to generate greater returns than the “Average S&P”, generally underperform the S&P! (CNBC Research completed in 2019 showed that 92% of large-cap funds lagged behind/or underperformed the broader S&P 500 Index over the past 15 year period.)

If you find yourself frightened by what has happened to the overall stock market (the S&P has been down as much as 30% or more from its recent highs, over the last 4-5 weeks ending March 23rd, 2020), and you are frightened by what has happened to your own portfolio in your 401K or IRA, you might want to consider a list of blue chip companies that have strong balance sheets, AND have a long history of paying out and growing their stock dividends. The following is a list of Blue Chip Corporations that have paid out their dividends and have grown their dividend payouts, for 50 years or more!

If you felt that a “guaranteed” monthly dividend of an extra $1000 per month would help you to sleep more soundly, then a $310,000 nest egg invested equally across these 10 corporations would (at 3.90%) payout $1,000 monthly on average. And even better than that, your 3.90% will most assuredly grow every year that you continue to own these stocks – as they each have 50+ year records of increasing their dividends.

I am not necessarily saying that you should invest in these 10 stocks. What I am suggesting is that if you had invested as shown above, this $1000 per month would have come in even with the crazy volatility of the past 5-6 weeks.

It might be time to educate yourself on an aristocratic list of blue chip, dividend growth stocks, so that you can sleep easier in the future.

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