WallStreet Trapper 1,000 in Dividends

Summary

This excerpt is from a YouTube video titled “$1,000 in Dividends” by the channel “Wallstreet Trapper.” The video aims to guide viewers on building a dividend portfolio by suggesting four specific companies: United Pacific (a railroad company), Simon Property Group (a real estate investment trust), Waste Management (a waste disposal company), and Costco (a retail company). The video emphasizes the importance of dividend reinvestment plans (DRIPs), which automatically use dividends to purchase more shares, compounding returns over time. The video also emphasizes the long-term nature of dividend investing, noting that building a sizable passive income stream requires significant capital and time. The speaker encourages viewers to start early and gradually build their positions by investing consistently.

Dividend Portfolio Discussion: Building Passive Income with Dividends

The sources discuss building a dividend portfolio for passive income, emphasizing starting early, reinvesting dividends, and focusing on the total dividend amount rather than the stock price.

• Dividend Reinvestment Plan (DRIP): A core concept is using a DRIP, which automatically reinvests dividends to buy more shares. Reinvesting allows dividends to compound, leading to faster portfolio growth. It’s recommended to keep the DRIP active until the portfolio generates enough passive income to meet your needs.
• Starting Early: The earlier you start investing in dividend-paying stocks, the better. Compounding over time allows smaller initial investments to grow significantly. The example given is of a parent who started a dividend portfolio for their eight-year-old child. Starting later requires a larger lump sum to achieve the same results.
• Focus on Total Dividend, Not Stock Price: The speaker encourages focusing on the desired annual dividend income rather than the individual stock price. The strategy involves calculating the number of shares needed to generate a specific dividend amount. The source materials recommend starting with smaller investment goals (e.g., $100 in dividends from a company) and gradually increasing those goals over time (e.g., to $250, $500, and eventually $1,000). The investor should continually buy more shares until their target dividend amount is reached.
• Example Companies: The video suggests four companies for a dividend portfolio:
  • Union Pacific (UNP): A railroad company with a good dividend payout. At the time of the video, to generate $1,000 in dividends, an investor would need 192 shares at $246 per share, totaling an investment of $47,232.
  • Simon Property Group (SPG): A real estate investment trust (REIT) that owns and operates shopping malls. To generate $1,000 in dividends, an investor would need 128 shares at $149 per share, totaling an investment of $19,072.
  • Waste Management (WM): A waste management company. To reach the $1,000 goal, 333 shares would be necessary at $29 per share, totaling $69,597.
  • Costco (COST): While acknowledging the lower dividend yield and high initial investment, the speaker points out Costco’s history of paying special dividends, which can significantly boost returns. Generating $1,000 in dividends from Costco would necessitate 215 shares at $779 per share, for a total investment of $167,485.
• “Two Ways of Getting Paid”: The source explains that dividend investing offers two income streams: dividends and equity growth. This is referred to as “leverage” and enables faster portfolio growth. The company essentially buys shares of itself for the investor through reinvested dividends, which are considered “free money.”

It is important to note that the sources focus on building a long-term dividend portfolio. The source advises viewers to do their own research. Individual financial situations vary and it’s important to consult with a financial professional before making investment decisions.