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Creating a dividend income machine
Real passive income; attainable for any investor; grows bigger each year
Robert Morris
December 31, 2024
The information contained here is educational, may not be typical, and does not guarantee returns. Background, education, effort, and application will affect your experience and the profitability of any business. Individual results may vary.This is not financial advice just education *
Independent Investors,
I trust you all had a wonderful and relaxing Christmas.
I love this time of year, for one because I get to give tons of presents and watch the faces of the ones I love open them.
My second favorite part is the stock market pays for all my presents!
We all love getting presents, but give yourself a present this year and take time while the whole world is on a timeout and make plans for 2025.
Reflect on:
What you accomplished this year, what you did well, what needs work, and where are you going to focus your money in 2025.
My brother and I were talking about the power of dividend income and as we watched Joe Bonamassa shred on guitar and I realized how little wall street money managers focus on teaching the power of buying dividend stocks.
So many people today could be enjoying a more comfortable lifestyle in retirement if they just understood a few simple rules about how to pick quality dividend stocks and ride the growth of the company into huge gains.
I know an investor who gets a $145,000 dividend check every quarter from XOM and that money continues to grow as he reinvests a portion of every check.
How did his dividend check grow to that point?
The simple answer is his grandmother made a choice to buy some stock years ago and tucked the shares away in a safe after purchase.
The original shares were purchased in a company that was bought out by another company that was bought out by a company that later became Exxon Mobil ( XOM).
If you own stock in a quality company you are setting your family up to reap the financial rewards for generations to come.
Let’s get into the good stuff
Curated Section
The only way to have consistent success in investing and trading is to live by disciplined rules and disciplined criteria for deciding how to and when to buy or sell.
The formula for success here is 10% How to + 90% Mindset + 100% discipline 100% of the time = Long Term Success
Remember,
10% How to+90% Mindset+ 100% Discipline 100% of the Time = Success
Dividend Stocks Buyers Guide
When buying dividend stocks the principle goal is long-term growing income
You should have a large portion of your stocks paying solid dividends. Not all of your stocks mind you, but a good ¾ of your overall portfolio.
My goal is no more than 12 well chosen stocks to own so between 7-10 of those stocks should pay a dividend.
Those stocks that I own for a dividend should be growing companies with a global customer base and the stocks should have options available.
The options come in hand to use when I want to create my own income by selling a covered call.
I also use put options to make up for my losses when the stock declines for long periods.
I plan to own dividend stocks for atleast 7 years up to as many as 20 years, in that time frame a strong downturn at some point is unavoidable and as a rebel investor there is no need to cry over a downturn.
Downturns give us a place to look for floors and find more buy points. So a downturn for us with our applied know how is money in the bank!
We will be laughing all the way to the bank!
The Dividend Stock has to have a durable competitive advantage:
The only way to be confident in whether or not you own a stock that has a durable advantage is to check the numbers. Many investors think that just because a stock is bought by many funds that it is quality stock to own.
That is not always the case.
Some stocks are bought because the fund has to buy something with the new round of monies that just came in.
If the fund is already at the max allowance of shares owned in their number one pick than they are going to find the next highest growth stock in that sector.
Also you have to keep in mind that not every fund that is profitable is run by a “Warren Buffett” type mind and it is entirely possible that a fund manager could be picking stocks with some old hat method.
You must learn to only trust in your own methods and formulas.
However, that is not to dissuade you from using a funds list of stocks to narrow down your search from 600 stocks to 30.
Just find a bunch of funds that have similar top 10 holdings and use those symbols that show up the most as your sexy stock list to begin your own work.
A growing stock will stick out with a growing dividend payout annually over the last 10 years. Look for the earnings per share to have grown a majority of the time within a 10 year window.
Examples from my own work look like this:
CMI 08/20/2014 payed out $0.78 and on 08/23/2024 CMI payed out $1.82 so a nice growth in the last 10 years.
CMI EPS in 2014 was about $2.30 in August and in 2024 the EPS was $5.86.
This example was completed on Briefing.com, but you do not need a paid service when you’re starting out. Free information is readily available on any public companies investor relations webpage.
Once You Own the Stock; Creating a monthly dividend income:
Buy shares in 3 stocks that pay out dividends at each of the 4 months within a quarter.
NKE (Jan,April,July,Oct)
CAT (Feb,May,Aug,Nov)
WM (March,June,Sept,Dec)
If you want to earn $5,000 a month take the annual dividend of each of these stocks and do the math to figure out how many shares you need to own to earn $20,000 a year in dividends per stock.
This will cover you nicely espcially if you keep to my other rules and buy stocks that are optionable, all these listed above are by the way.
You can use those options to sell far our in time covered calls and sweep up some cash from your shares when needed.
This is what I refer to as the Buffett Method,because it was taught to me by a man who learned it from Warren himself.
The Buffett method isn’t going to make you alot in the beginning, but keep in mind how much you can earn down the road when selling a 6 month call for $1 on 100,000 shares of stock.
Then letting the call option expire worthless and repeating the process.
At that point your sweeping up more than change! You may need a rake for all that cash!
“Not seeing results? Feel like giving up? Consider this: the LAST thing to grow on a fruit tree ….is the fruit.”
That thought process has kept me going many times after getting my teeth kicked in by the stock market.
I am glad to be back from the extended Christmas break I had to take. This quote will benefit all who read it and take it to heart.
I want to here from you, I have a simple form for you to let me know what your questions are about the stock market and building a stock market income.
Click this line here for the form
Or the button below
The goal here is for you to learn the edge that you need to begin building your wealth in the stock market without overpaying for advice that keeps you poor.
I am coming off a year of a total return in 2024 of +462% gain on my money… what is your advisor’s target for your money?
Your friend in success,
Robert M Morris
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