June 26, 2025 • 29 mins
We’re switching things up a little, today’s episode is Suze School. Suze starts off with a recap of where things are, right now, in the economy and what effects recent world events have on it. Then Suze explains dividend paying stocks and Treasuries and why you should consider one over the other.
Watch Suze’s YouTube Channel
Jumpstart financial wellness for your employees: https://bit.ly/SecureSave
Protect your financial future with the Must Have Docs: https://bit.ly/3Vq1V3G
Get your savings going with Alliant Credit Union: https://bit.ly/3rg0Yio
Get Suze’s special offers for podcast listeners at suzeorman.com/offer
Join Suze’s Women & Money Community for FREE and ASK SUZE your questions which may just end up on the podcast. Download the app by following one of these links:
CLICK HERE FOR APPLE: https://apple.co/2KcAHbH
CLICK HERE FOR GOOGLE PLAY: https://bit.ly/3curfMI
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Suze (00:29):
June 26, 2025. Welcome everybody to the Women and Money podcast,
as well as everybody smart enough to listen. Suze O,
here and today is going to be Suze School. I know,
I know you all miss KT already, but since we
missed last Sundays when everything was going on in the world,
(00:51):
I thought today would be better if I did a
Suze School and reiterated the things that I really want
you to know.
Why did I say reiterated? Because the truth of the
matter is we have called it exactly right.
Did I not tell you a little bit ago that
the markets would go up and then they would go down?
(01:13):
They'd be like a roller coaster, but coming around July 4th,
don't be surprised if in fact you see the Standard
and Poor's go through it's high. The summer should continue,
and then we go higher and we'll see how it
goes after that. But right now.
I get that the world is just crazy, but look
(01:35):
at what the stock market did. It was as if
we never attacked those nuclear facilities in Iran. It was
as if we weren't worried about oil production.
Oil on the rumor, by the way, that this was
going to happen skyrocketed from about 64 to $65 a
(02:00):
barrel for crude all the way up to $75 and
I would be watching the news and they said, Oh,
oil's going to go to $150. Oil's going to go
through the roof. Look at everybody, we're having trouble over there.
They can close the access to oil. All these things
can happen.
And I was like, no, oil is in a down trend.
(02:22):
It met its resistance level at about 79, and again,
for those of you who don't know, a resistance level
is it hits a level that's its highest it's been
in a while, and if it goes through that, it
will go higher. If it doesn't, it will tend to
go down, and I again believe.
(02:44):
Unless they close the Strait, in case they do just
something crazy over there, which I just don't think they
will do.
I don't think oil is going to go up, and
it is in a down trend. Same thing with bonds.
I think bonds are very, very weak here, and that's
(03:05):
one of the reasons that I wanted to do this
Suze School because on my YouTube channel, and are you
all watching it by the way, youTube.com/ Suze Orman.
A week ago I did a video on there just
something isn't right with the economy and a few hundred thousand
(03:27):
of you watched it, which I like a lot. However,
there I talked about rather than bonds,
I would like to see you go into dividend paying stocks,
and I've been telling all of you now for a
very long period of time dividend paying stocks, if you
want safety and income, even though I understand everybody that
(03:51):
dividend paying stocks are not safe if you're comparing them
to treasuries, but they all.
So do pay you more, and if you pick your
dividend paying stocks correctly, you should be OK. That's what
I was saying on the YouTube and all these people wrote,
some of them yelling at me saying, Suze, you know
dividends aren't guaranteed, blah blah blah blah, as if I
(04:14):
don't know things. However, if you pick the right dividends,
you should be relatively OK.
A great deal of my money is in dividend paying
stocks because I do want income once I stop earning income.
(04:34):
I would like to live off of the interest in everything,
not my principal.
But the interest and the dividend income that my money
is earning, also the money I have in bonds, the
money I have in municipal bonds, so I have a
lot of money, as you know, in different areas, but
all of that money is starting to be geared towards
(04:57):
being able to support me in terms of my income
needs as I get older and when I'm no longer
generating income from my work.
That doesn't mean, however, I want you to take all
of your money and put it into dividend paying stocks,
because the truth of the matter is the anchor of
(05:19):
this bull market really is technology.
You have got to be invested in technology, in Semi's,
in AI. You have got to be because that really
is where when you're looking for investments, in my opinion
(05:41):
you're looking to invest in where is the future, not
where was big money made in the past, where is
it going to be made now and in the future,
and where is the future going.
And the future is going to artificial intelligence, everybody. There
have been so many that I've told you about over
(06:03):
the past year or two, and hopefully you've purchased them.
You know, starting back in 2024 in October, I told
you that I loved Palantir then. I loved Avco or Broadcom,
symbol A V G O.
I loved Microsoft, MSFT. All of those I told you
(06:25):
that I loved, and so on and so forth, and
hopefully you took advantage of them because they are up tremendously,
but the 3 mega caps right now that I do
think are going to lead the way are Microsoft, Meta,
and NVIDIA, and those are really the top 3,
(06:48):
that hopefully a lot of you have participated in and
it's still not too late, but there's all kinds of
ways for you to participate in it. And if you
don't want to buy individual stocks, then you can obviously
buy an ETF. What has been one of my favorite
ETFs in this area that I told all of you
(07:09):
about symbol SMH.
Currently it's at 273. Do you remember when it was
down in the low 200s and everything, and somebody wrote
into the podcast and how mad they were that they
thought it was such a crappy ETF and therefore they
want it out at 235. OK, but I still love
(07:31):
that ETF. I think it's absolutely possible it could go
to 350 or 400. There are many things out there
that you can participate
in and hopefully you've taken notes over all the podcasts
that I've been doing this. However, participate in whatever way
(07:53):
you can. One of my new favorites, by the way,
is AMD, symbol, so you might want to look that up. However,
because I do not know your individual situations, and I
don't know what you want to do financially, you have
to decide and maybe work with a financial professional. Where
(08:14):
should you be invested? What should you be doing? Just
cause you hear me say these stocks, and I've said
many over the past two years, doesn't mean you should
just go run out and buy them.
So it's important that you know what your financial goals are,
the risks that you could take, and what you want
(08:34):
to buy and what you don't feel that you're qualified
to buy, just same.
But whatever you're buying, make sure that you do it
on a dollar cost averaging basis. All right, do not
just go in and put one lump sum in and
don't take advantage of it when it goes down because things...
(08:57):
They'll always go down and then come back up hopefully
if they're good qualities. So think about that Bitcoin. I
talked about that and I do still like Bitcoin and
I get that Bitcoin did not act the way you
wanted it to act recently if you've been following it,
(09:18):
it went all the way down, you know, to 99,000 recently.
I think it's back at about 106, 107.
But Bitcoin is not something that's gonna go up like
gold when we go to war or there's things that
we're in conflict. Bitcoin is not like that. It actually,
(09:38):
if you watch it, doesn't hold up when things are
not good, but it does eventually come back, and I
still think that in the long run, everybody, and I
don't know when that will be.
I don't think you should be surprised to see it
at 150 or 170 again. I know so many of
you get mad at me when I talk about it.
(10:00):
Too many things are just going in that way, including
certain things that the.
The government has just done with Stablecoins and maybe we'll
do a podcast on that, but it's just something that
I don't think it's a bad idea to have a
little bit, especially if you can afford to lose it. Gold...
(10:23):
haven't been that pleased with gold, but I still would
hold a little bit of it.
I wanted it to react a little better, especially with
the happenings of last week. It didn't, but doesn't mean
that we should just hold on to a little bit,
but overall,
everything is doing exactly what we've said it would be doing.
(10:46):
Real estate is starting to go down a little bit.
It's having a little bit of a hard time here.
So if you're a buyer, I would just hold on
for a little.
And if you're a seller, I would not be that stuck
on your price at this point in time.
So those are the things that we've already talked about,
(11:06):
you're up to date on now, but you should not
be freaking out.
Do not freak out. The markets are showing you that
they're stronger than things that are happening outside like Iran
and what's happening with Gaza and Israel and everything. It's
like they have a mind of their own right now.
(11:27):
That's not to say if something dramatic happened in the
United States or whatever, they won't respond.
They're strong right now, so hopefully you are taking advantage
of that.
Now what I wanted to talk to you about Suze
School today is and you need to really take out
(11:49):
your notebooks for this one, OK? I want to clarify
why on the YouTube video that I made, and you
might all want to go and take a look at it.
Why I was talking about I'd rather see you go
into dividend paying stocks than bonds, and again the reason
(12:12):
is I just think bonds are weak, and I think
that dividend paying stocks can actually give you more income
per year than bonds. Did you hear what I said?
Now I understand very well that stocks go up and
down in value.
(12:33):
But if you select, like I said, good quality dividend
paying stocks.
That pay a dividend and that have been pretty consistent
with raising their dividends or paying a dividend over a
long period of time that doesn't mean that in certain
years they didn't stop paying a dividend but they came
(12:55):
back and continued to pay.
And everything that...
not only can you get income, but in certain markets
you could also see those stocks go up in value
as well. So here's what I want you to understand
about a dividend.
(13:17):
Not all stocks pay a dividend.
But many stocks do. What is a dividend? A dividend
is the company that you're purchasing. The stock company decides
on an amount of money per share.
That usually every quarter, so they divide it by 4
(13:38):
if they're going to give you $2 a share, every quarter,
every 3 months, they pay you 50 cents per share.
So that dividend can go up every year. The dividend
can go down, and the company, if it gets in trouble,
they can also absolutely delete the dividend altogether. Stop paying it.
(14:03):
So those are things that you need to know about
dividend paying stocks. When a dividend is paid, however,
You do not pay tax on it the way you
pay tax, let's say on a Treasury bill bond or note.
When you get interest from a treasury note, let's say
(14:24):
it's a 10 year Treasury note, you pay ordinary income
tax on that interest, and you pay it on your
federal level. You obviously do not pay any tax on
it on the state level.
But you do pay ordinary income tax on the federal level.
On dividend stocks. Now listen to me closely. On dividend stocks,
(14:50):
the majority of them pay what's called a qualified dividend.
And a qualified dividend simply means it's been paid out
by a legitimate corporation that you've held it for at
least 60 days before it pays its dividend and after
it paid its dividends, so then the dividend is qualified
(15:10):
and what is it qualified for? It's qualified to be
taxed as a capital gain.
Did you hear me? It's taxed as a capital gain
versus ordinary income. Now you may think, hey, what difference
does that make to me? In a second I'm going
(15:32):
to show you exactly how much of a difference it
can be.
Now I went through some of the dividend paying stocks
that I personally own and I picked out 7 of them.
That paid a dividend of 3.90% or higher. I have
(15:57):
many dividend stocks that pay 2%, that pay 1%, whatever
it may be, but let's say you were out there
and you wanted to replace the income.
From a treasury with dividend paying stocks, a 10 year
treasury is paying, let's just say about 4.3%.
(16:19):
And you wanted to replace that income. You just wanted
to see, could it be done, so I picked out
seven of my stocks that pay a 3.9% yield or above.
And these are the 7. I'm not saying you should
(16:40):
buy them. There are sometimes there's risks in everything, but
I'm just giving you an example.
The first one is AbbVie, symbol is ABBV. Second one,
and I've told you I like the stock, AT&T.
The symbol is T. Prudential Financial symbol is PRU.
(17:06):
5th/3rd Bankcorp symbol as FITB.
Another stock by the name of Sanofi simple as S
N Y.
William's company symbol WMB.
And Amcor,
symbol AMCR. Now I'm not going to go into what
(17:29):
all these stocks do and everything about them, but here's
what I can tell you about them. First of all,
when you're looking for a good dividend paying stock, you
want to make sure that the company is making enough money.
It's called free cash flow, money that isn't committed anywhere.
(17:52):
But they have enough free cash flow to cover the dividend.
That's the first thing you really want to look at.
All of them have essentially strong cash flow. AT&T, it's adequate.
And really Amcor is adequate, but all the others really
(18:18):
have strong cash flows. Also, most of them have increased
their dividends every single year for many, many years, but
There are some of these that in 2022, for instance,
I think it was AT&T, cut off their dividend for
(18:40):
a little bit. Also AbbVie was a spinoff, and they
have been increasing and paying their dividends since 2013. So
there's all little nuances with these seven companies, but all
of them, in my opinion, are absolutely relatively safe.
(19:00):
Now, let's do a hypothetical situation. Let's assume, OK, that
you have $100,000 to invest.
And you live in the state of California and you
are married and make $200,000 between the two of you.
(19:22):
Let's just assume that is true.
And you decide that you want to see the difference
between if you were to invest $14,000 some odd dollars
in equal amount of money in each one of these
seven dividend paying stocks versus if you took the money
(19:44):
and bought let's say a 10 year treasury note at 4.3%.
OK. What would that look like?
Here's what it would look like after one year.
Now this assumes that over these 10 years, the dividends
kind of stay the same, they never increase.
(20:07):
And that everything just with the dividends remains equal and
that obviously the income on your treasury is equal as well.
So here's what we have. You have invested $14,285 in
each one of these, and if you do so, your
(20:29):
annual average dividend then would be 5.69%. So after write
this down, everybody, after one year you would have earned
$5,685.72 in dividends.
Now, because these are qualified dividends, meaning you pay it
(20:54):
in the capital gains tax rate.
You would only be paying on these dividends on this $5,685.
You would pay to the feds $853 OK, but to
the state of California, remember you're a California resident, so
I'm making this really the most fair comparison I can.
(21:19):
Cause if you didn't live in a state that had taxes,
you would have just paid $853 on these dividends, and
that would have been it. However, we're assuming you live
in the state of California.
And you will owe $528 in taxes on these dividends
(21:40):
for a total of $1,381. That means that after all
taxes are paid.
You will have put in your pocket $4,304 for you
to pay your bills. That's a 4.3% after tax return
(22:02):
on your money.
Now let's look at the 10-year treasury, giving you 4.3%.
Obviously at the end of the first year you will
have been paid out $4300 and again because it's ordinary
income taxes and you make $200,000 a year jointly, you're
(22:25):
in the 24% tax bracket that's $1,032.
In income tax because this is a treasury, you don't
pay California anything, so there's no state tax. So your
total tax bill was $1,0032. So after taxes you actually
(22:48):
have $3,268 to spend on your expenses. That's a 3.27% yield.
So, one, the dividends are giving you $4,304 after taxes.
The treasury is giving you $3,268 after taxes.
(23:15):
That's a big deal, especially if you look out 10 years.
Again, let's just assume everything stays the same.
After 10 years you have $43,040 of after tax income
to do whatever you want with.
(23:36):
On the treasury, you have only $32,680 that it has
paid out to you after tax. That's a difference of
$10,360 or almost 10% of your original investment. Now why
is that important?
(23:58):
Yes, I know a lot of you are afraid of
dividend paying stocks, but there are many of these stocks
that if you actually look at the growth over the
past 5 or 10 years, you would have made money
on many of them as well. Some of them actually
went up in value. Some of them went down, and
(24:19):
you would not have lost out. Now there is no
way that I can guarantee, whether it's these stocks or
any dividend paying stock.
As to what is going to happen, but if you
pick your dividend paying stocks correctly.
And they're giving you a nice dividend, not too high
(24:39):
of a dividend. I'm not asking you to go out
there and look at a dividend that's paying you 18%, 11%,
just ordinary interest, ordinary ranges of income like these stocks
go from 3.9% to 6.1% to 4.5% to 3.89 to 8.75%
(25:02):
to 5.00 to 8%.
So they're all in the range there, but you don't
see any at 11, 12, 13, or 15. OK, so
don't look at how high the yield is. You need
to look at how safe the yield is, and one
way you look at that is through free cash flow.
(25:27):
Now this may seem difficult, but really it is not.
But dividend paying stocks are a great alternative, especially when
bonds are kind of weak, and you know you just
might need more income than what treasuries are paying and
again look at what you get after taxes. That is
(25:52):
what really matters and to be taxed on a qualified
dividend as a capital gain versus.
On a treasury ordinary income, that is a very, very
big deal. Also, I just want to say many stocks
raise their dividends every single year. So unlike a treasury
(26:15):
where you would be locked in at that 4.3% for
all those 10 years and if interest rates went up,
the value of that treasury would go down, so you
wouldn't be able to sell it.
And obviously the reverse is true. If interest rates went down,
the value would go up, but you wouldn't want to
sell it because then where would you get 4.3% again?
(26:39):
Just something to think about, but in good quality dividend
paying stocks, it is not unlikely that the dividend is
either raised every year or every few years, so your
income could absolutely go up.
And to those people who say, but what happens when
the stack goes down?
(27:02):
If stocks are going down, at least you're being paid
to wait until they do come back up. What you
care about isn't the price of the stock. You care
about the income that it is paying you in the
form of a dividend. So should all of your money
(27:24):
be doing this? No.
Again, as I started with, I want to see some
of your money in AI and technology and semis and
all these things. Absolutely I want you there.
However, if you have money right now and you're kind
of deciding, do I do more treasuries, what do I
(27:45):
do right now? I don't like how bonds are responding.
All right, everybody, I'm telling you you might want to
look into good quality.
Dividend paying stocks. All right, that is your Suzie school
for today. So again, I do want you to also
take a look at YouTube.com/ SuzeOrman, see what we have
(28:10):
going on there. I will be making a new video,
so I'm sure it will be up either
today or tomorrow, but it's something that you could use
in combination with the Suze School and of course nothing
replaces Ask KT and Suze Anything which will be this Sunday,
(28:31):
by the way, cause I know many of you cannot
do without KT.
And I really understand that very well. All right, so
until Sunday there's really only one thing that I want
you to remember, and it is this people first, then money,
then things. Now you
stay safe.
June 26, 2025. Welcome everybody to the Women and Money podcast,
as well as everybody smart enough to listen. Suze O,
here and today is going to be Suze School. I know,
I know you all miss KT already, but since we
missed last Sundays when everything was going on in the world,
(00:51):
I thought today would be better if I did a
Suze School and reiterated the things that I really want
you to know.
Why did I say reiterated? Because the truth of the
matter is we have called it exactly right.
Did I not tell you a little bit ago that
the markets would go up and then they would go down?
(01:13):
They'd be like a roller coaster, but coming around July 4th,
don't be surprised if in fact you see the Standard
and Poor's go through it's high. The summer should continue,
and then we go higher and we'll see how it
goes after that. But right now.
I get that the world is just crazy, but look
(01:35):
at what the stock market did. It was as if
we never attacked those nuclear facilities in Iran. It was
as if we weren't worried about oil production.
Oil on the rumor, by the way, that this was
going to happen skyrocketed from about 64 to $65 a
(02:00):
barrel for crude all the way up to $75 and
I would be watching the news and they said, Oh,
oil's going to go to $150. Oil's going to go
through the roof. Look at everybody, we're having trouble over there.
They can close the access to oil. All these things
can happen.
And I was like, no, oil is in a down trend.
(02:22):
It met its resistance level at about 79, and again,
for those of you who don't know, a resistance level
is it hits a level that's its highest it's been
in a while, and if it goes through that, it
will go higher. If it doesn't, it will tend to
go down, and I again believe.
(02:44):
Unless they close the Strait, in case they do just
something crazy over there, which I just don't think they
will do.
I don't think oil is going to go up, and
it is in a down trend. Same thing with bonds.
I think bonds are very, very weak here, and that's
(03:05):
one of the reasons that I wanted to do this
Suze School because on my YouTube channel, and are you
all watching it by the way, youTube.com/ Suze Orman.
A week ago I did a video on there just
something isn't right with the economy and a few hundred thousand
(03:27):
of you watched it, which I like a lot. However,
there I talked about rather than bonds,
I would like to see you go into dividend paying stocks,
and I've been telling all of you now for a
very long period of time dividend paying stocks, if you
want safety and income, even though I understand everybody that
(03:51):
dividend paying stocks are not safe if you're comparing them
to treasuries, but they all.
So do pay you more, and if you pick your
dividend paying stocks correctly, you should be OK. That's what
I was saying on the YouTube and all these people wrote,
some of them yelling at me saying, Suze, you know
dividends aren't guaranteed, blah blah blah blah, as if I
(04:14):
don't know things. However, if you pick the right dividends,
you should be relatively OK.
A great deal of my money is in dividend paying
stocks because I do want income once I stop earning income.
(04:34):
I would like to live off of the interest in everything,
not my principal.
But the interest and the dividend income that my money
is earning, also the money I have in bonds, the
money I have in municipal bonds, so I have a
lot of money, as you know, in different areas, but
all of that money is starting to be geared towards
(04:57):
being able to support me in terms of my income
needs as I get older and when I'm no longer
generating income from my work.
That doesn't mean, however, I want you to take all
of your money and put it into dividend paying stocks,
because the truth of the matter is the anchor of
(05:19):
this bull market really is technology.
You have got to be invested in technology, in Semi's,
in AI. You have got to be because that really
is where when you're looking for investments, in my opinion
(05:41):
you're looking to invest in where is the future, not
where was big money made in the past, where is
it going to be made now and in the future,
and where is the future going.
And the future is going to artificial intelligence, everybody. There
have been so many that I've told you about over
(06:03):
the past year or two, and hopefully you've purchased them.
You know, starting back in 2024 in October, I told
you that I loved Palantir then. I loved Avco or Broadcom,
symbol A V G O.
I loved Microsoft, MSFT. All of those I told you
(06:25):
that I loved, and so on and so forth, and
hopefully you took advantage of them because they are up tremendously,
but the 3 mega caps right now that I do
think are going to lead the way are Microsoft, Meta,
and NVIDIA, and those are really the top 3,
(06:48):
that hopefully a lot of you have participated in and
it's still not too late, but there's all kinds of
ways for you to participate in it. And if you
don't want to buy individual stocks, then you can obviously
buy an ETF. What has been one of my favorite
ETFs in this area that I told all of you
(07:09):
about symbol SMH.
Currently it's at 273. Do you remember when it was
down in the low 200s and everything, and somebody wrote
into the podcast and how mad they were that they
thought it was such a crappy ETF and therefore they
want it out at 235. OK, but I still love
(07:31):
that ETF. I think it's absolutely possible it could go
to 350 or 400. There are many things out there
that you can participate
in and hopefully you've taken notes over all the podcasts
that I've been doing this. However, participate in whatever way
(07:53):
you can. One of my new favorites, by the way,
is AMD, symbol, so you might want to look that up. However,
because I do not know your individual situations, and I
don't know what you want to do financially, you have
to decide and maybe work with a financial professional. Where
(08:14):
should you be invested? What should you be doing? Just
cause you hear me say these stocks, and I've said
many over the past two years, doesn't mean you should
just go run out and buy them.
So it's important that you know what your financial goals are,
the risks that you could take, and what you want
(08:34):
to buy and what you don't feel that you're qualified
to buy, just same.
But whatever you're buying, make sure that you do it
on a dollar cost averaging basis. All right, do not
just go in and put one lump sum in and
don't take advantage of it when it goes down because things...
(08:57):
They'll always go down and then come back up hopefully
if they're good qualities. So think about that Bitcoin. I
talked about that and I do still like Bitcoin and
I get that Bitcoin did not act the way you
wanted it to act recently if you've been following it,
(09:18):
it went all the way down, you know, to 99,000 recently.
I think it's back at about 106, 107.
But Bitcoin is not something that's gonna go up like
gold when we go to war or there's things that
we're in conflict. Bitcoin is not like that. It actually,
(09:38):
if you watch it, doesn't hold up when things are
not good, but it does eventually come back, and I
still think that in the long run, everybody, and I
don't know when that will be.
I don't think you should be surprised to see it
at 150 or 170 again. I know so many of
you get mad at me when I talk about it.
(10:00):
Too many things are just going in that way, including
certain things that the.
The government has just done with Stablecoins and maybe we'll
do a podcast on that, but it's just something that
I don't think it's a bad idea to have a
little bit, especially if you can afford to lose it. Gold...
(10:23):
haven't been that pleased with gold, but I still would
hold a little bit of it.
I wanted it to react a little better, especially with
the happenings of last week. It didn't, but doesn't mean
that we should just hold on to a little bit,
but overall,
everything is doing exactly what we've said it would be doing.
(10:46):
Real estate is starting to go down a little bit.
It's having a little bit of a hard time here.
So if you're a buyer, I would just hold on
for a little.
And if you're a seller, I would not be that stuck
on your price at this point in time.
So those are the things that we've already talked about,
(11:06):
you're up to date on now, but you should not
be freaking out.
Do not freak out. The markets are showing you that
they're stronger than things that are happening outside like Iran
and what's happening with Gaza and Israel and everything. It's
like they have a mind of their own right now.
(11:27):
That's not to say if something dramatic happened in the
United States or whatever, they won't respond.
They're strong right now, so hopefully you are taking advantage
of that.
Now what I wanted to talk to you about Suze
School today is and you need to really take out
(11:49):
your notebooks for this one, OK? I want to clarify
why on the YouTube video that I made, and you
might all want to go and take a look at it.
Why I was talking about I'd rather see you go
into dividend paying stocks than bonds, and again the reason
(12:12):
is I just think bonds are weak, and I think
that dividend paying stocks can actually give you more income
per year than bonds. Did you hear what I said?
Now I understand very well that stocks go up and
down in value.
(12:33):
But if you select, like I said, good quality dividend
paying stocks.
That pay a dividend and that have been pretty consistent
with raising their dividends or paying a dividend over a
long period of time that doesn't mean that in certain
years they didn't stop paying a dividend but they came
(12:55):
back and continued to pay.
And everything that...
not only can you get income, but in certain markets
you could also see those stocks go up in value
as well. So here's what I want you to understand
about a dividend.
(13:17):
Not all stocks pay a dividend.
But many stocks do. What is a dividend? A dividend
is the company that you're purchasing. The stock company decides
on an amount of money per share.
That usually every quarter, so they divide it by 4
(13:38):
if they're going to give you $2 a share, every quarter,
every 3 months, they pay you 50 cents per share.
So that dividend can go up every year. The dividend
can go down, and the company, if it gets in trouble,
they can also absolutely delete the dividend altogether. Stop paying it.
(14:03):
So those are things that you need to know about
dividend paying stocks. When a dividend is paid, however,
You do not pay tax on it the way you
pay tax, let's say on a Treasury bill bond or note.
When you get interest from a treasury note, let's say
(14:24):
it's a 10 year Treasury note, you pay ordinary income
tax on that interest, and you pay it on your
federal level. You obviously do not pay any tax on
it on the state level.
But you do pay ordinary income tax on the federal level.
On dividend stocks. Now listen to me closely. On dividend stocks,
(14:50):
the majority of them pay what's called a qualified dividend.
And a qualified dividend simply means it's been paid out
by a legitimate corporation that you've held it for at
least 60 days before it pays its dividend and after
it paid its dividends, so then the dividend is qualified
(15:10):
and what is it qualified for? It's qualified to be
taxed as a capital gain.
Did you hear me? It's taxed as a capital gain
versus ordinary income. Now you may think, hey, what difference
does that make to me? In a second I'm going
(15:32):
to show you exactly how much of a difference it
can be.
Now I went through some of the dividend paying stocks
that I personally own and I picked out 7 of them.
That paid a dividend of 3.90% or higher. I have
(15:57):
many dividend stocks that pay 2%, that pay 1%, whatever
it may be, but let's say you were out there
and you wanted to replace the income.
From a treasury with dividend paying stocks, a 10 year
treasury is paying, let's just say about 4.3%.
(16:19):
And you wanted to replace that income. You just wanted
to see, could it be done, so I picked out
seven of my stocks that pay a 3.9% yield or above.
And these are the 7. I'm not saying you should
(16:40):
buy them. There are sometimes there's risks in everything, but
I'm just giving you an example.
The first one is AbbVie, symbol is ABBV. Second one,
and I've told you I like the stock, AT&T.
The symbol is T. Prudential Financial symbol is PRU.
(17:06):
5th/3rd Bankcorp symbol as FITB.
Another stock by the name of Sanofi simple as S
N Y.
William's company symbol WMB.
And Amcor,
symbol AMCR. Now I'm not going to go into what
(17:29):
all these stocks do and everything about them, but here's
what I can tell you about them. First of all,
when you're looking for a good dividend paying stock, you
want to make sure that the company is making enough money.
It's called free cash flow, money that isn't committed anywhere.
(17:52):
But they have enough free cash flow to cover the dividend.
That's the first thing you really want to look at.
All of them have essentially strong cash flow. AT&T, it's adequate.
And really Amcor is adequate, but all the others really
(18:18):
have strong cash flows. Also, most of them have increased
their dividends every single year for many, many years, but
There are some of these that in 2022, for instance,
I think it was AT&T, cut off their dividend for
(18:40):
a little bit. Also AbbVie was a spinoff, and they
have been increasing and paying their dividends since 2013. So
there's all little nuances with these seven companies, but all
of them, in my opinion, are absolutely relatively safe.
(19:00):
Now, let's do a hypothetical situation. Let's assume, OK, that
you have $100,000 to invest.
And you live in the state of California and you
are married and make $200,000 between the two of you.
(19:22):
Let's just assume that is true.
And you decide that you want to see the difference
between if you were to invest $14,000 some odd dollars
in equal amount of money in each one of these
seven dividend paying stocks versus if you took the money
(19:44):
and bought let's say a 10 year treasury note at 4.3%.
OK. What would that look like?
Here's what it would look like after one year.
Now this assumes that over these 10 years, the dividends
kind of stay the same, they never increase.
(20:07):
And that everything just with the dividends remains equal and
that obviously the income on your treasury is equal as well.
So here's what we have. You have invested $14,285 in
each one of these, and if you do so, your
(20:29):
annual average dividend then would be 5.69%. So after write
this down, everybody, after one year you would have earned
$5,685.72 in dividends.
Now, because these are qualified dividends, meaning you pay it
(20:54):
in the capital gains tax rate.
You would only be paying on these dividends on this $5,685.
You would pay to the feds $853 OK, but to
the state of California, remember you're a California resident, so
I'm making this really the most fair comparison I can.
(21:19):
Cause if you didn't live in a state that had taxes,
you would have just paid $853 on these dividends, and
that would have been it. However, we're assuming you live
in the state of California.
And you will owe $528 in taxes on these dividends
(21:40):
for a total of $1,381. That means that after all
taxes are paid.
You will have put in your pocket $4,304 for you
to pay your bills. That's a 4.3% after tax return
(22:02):
on your money.
Now let's look at the 10-year treasury, giving you 4.3%.
Obviously at the end of the first year you will
have been paid out $4300 and again because it's ordinary
income taxes and you make $200,000 a year jointly, you're
(22:25):
in the 24% tax bracket that's $1,032.
In income tax because this is a treasury, you don't
pay California anything, so there's no state tax. So your
total tax bill was $1,0032. So after taxes you actually
(22:48):
have $3,268 to spend on your expenses. That's a 3.27% yield.
So, one, the dividends are giving you $4,304 after taxes.
The treasury is giving you $3,268 after taxes.
(23:15):
That's a big deal, especially if you look out 10 years.
Again, let's just assume everything stays the same.
After 10 years you have $43,040 of after tax income
to do whatever you want with.
(23:36):
On the treasury, you have only $32,680 that it has
paid out to you after tax. That's a difference of
$10,360 or almost 10% of your original investment. Now why
is that important?
(23:58):
Yes, I know a lot of you are afraid of
dividend paying stocks, but there are many of these stocks
that if you actually look at the growth over the
past 5 or 10 years, you would have made money
on many of them as well. Some of them actually
went up in value. Some of them went down, and
(24:19):
you would not have lost out. Now there is no
way that I can guarantee, whether it's these stocks or
any dividend paying stock.
As to what is going to happen, but if you
pick your dividend paying stocks correctly.
And they're giving you a nice dividend, not too high
(24:39):
of a dividend. I'm not asking you to go out
there and look at a dividend that's paying you 18%, 11%,
just ordinary interest, ordinary ranges of income like these stocks
go from 3.9% to 6.1% to 4.5% to 3.89 to 8.75%
(25:02):
to 5.00 to 8%.
So they're all in the range there, but you don't
see any at 11, 12, 13, or 15. OK, so
don't look at how high the yield is. You need
to look at how safe the yield is, and one
way you look at that is through free cash flow.
(25:27):
Now this may seem difficult, but really it is not.
But dividend paying stocks are a great alternative, especially when
bonds are kind of weak, and you know you just
might need more income than what treasuries are paying and
again look at what you get after taxes. That is
(25:52):
what really matters and to be taxed on a qualified
dividend as a capital gain versus.
On a treasury ordinary income, that is a very, very
big deal. Also, I just want to say many stocks
raise their dividends every single year. So unlike a treasury
(26:15):
where you would be locked in at that 4.3% for
all those 10 years and if interest rates went up,
the value of that treasury would go down, so you
wouldn't be able to sell it.
And obviously the reverse is true. If interest rates went down,
the value would go up, but you wouldn't want to
sell it because then where would you get 4.3% again?
(26:39):
Just something to think about, but in good quality dividend
paying stocks, it is not unlikely that the dividend is
either raised every year or every few years, so your
income could absolutely go up.
And to those people who say, but what happens when
the stack goes down?
(27:02):
If stocks are going down, at least you're being paid
to wait until they do come back up. What you
care about isn't the price of the stock. You care
about the income that it is paying you in the
form of a dividend. So should all of your money
(27:24):
be doing this? No.
Again, as I started with, I want to see some
of your money in AI and technology and semis and
all these things. Absolutely I want you there.
However, if you have money right now and you're kind
of deciding, do I do more treasuries, what do I
(27:45):
do right now? I don't like how bonds are responding.
All right, everybody, I'm telling you you might want to
look into good quality.
Dividend paying stocks. All right, that is your Suzie school
for today. So again, I do want you to also
take a look at YouTube.com/ SuzeOrman, see what we have
(28:10):
going on there. I will be making a new video,
so I'm sure it will be up either
today or tomorrow, but it's something that you could use
in combination with the Suze School and of course nothing
replaces Ask KT and Suze Anything which will be this Sunday,
(28:31):
by the way, cause I know many of you cannot
do without KT.
And I really understand that very well. All right, so
until Sunday there's really only one thing that I want
you to remember, and it is this people first, then money,
then things. Now you
stay safe.
Popular Podcasts
Fudd Around And Find Out
UConn basketball star Azzi Fudd brings her championship swag to iHeart Women’s Sports with Fudd Around and Find Out, a weekly podcast that takes fans along for the ride as Azzi spends her final year of college trying to reclaim the National Championship and prepare to be a first round WNBA draft pick. Ever wonder what it’s like to be a world-class athlete in the public spotlight while still managing schoolwork, friendships and family time? It’s time to Fudd Around and Find Out!
Crime Junkie
Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by audiochuck Media Company.
The Breakfast Club
The World's Most Dangerous Morning Show, The Breakfast Club, With DJ Envy, Jess Hilarious, And Charlamagne Tha God!