March 6, 2024 • 23 mins
In this episode, I cover Dividend Aristocrats and Kings.
I also cover the following topics in this episode:
- What are dividends?
- What are dividend aristocrats?
- What are dividend kings?
- Which companies have the longest dividend streaks?
- Three extraordinary dividend returns (KO, HD, WMT)
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
In this episode we'll cover what are dividend
aristocrats and dividend kingsin the US and in Canada.
Hi, my name is Kanwal Sarai andwelcome to the Simply Investing
Dividend Podcast.
In this episode, we're going tocover the following five topics
(00:21):
.
We'll start off with what aredividends, then we're going to
take a look at what are dividendaristocrats, then we'll look at
what are dividend kings, andthen we'll take a look at two
examples of companies one in theUS and one in Canada with the
longest dividend paying streak,and then, finally, we'll take a
(00:44):
look at some real-life examplesof extraordinary returns.
So dividends are essentiallythe company sharing its profits
with you, the shareholder.
So, for example, if a companyis paying a dividend of $1 per
share and you own 1,000 shares,you will receive $1,000 for
(01:04):
every year for as long as youown those shares and as long as
the company continues to pay thedividend.
Now you can spend that money ifyou wish, or you can reinvest
it.
The dividends are depositeddirectly into your trading
account as cash and we'll take alook later on in this episode
as to what happens to thedividend when the share price
(01:26):
drops or if the share price goesup.
Now let's move on to our nexttopic in this episode, and that
is what are dividend aristocrats?
Now, it's really simple.
There's only two criteria thata company has to meet when it
comes to dividend aristocrats inthe US.
So, first off, the company mustbe part of the SNMP 500.
(01:49):
And then the second requirementis that the company has had 25
years or more of consecutivedividend increases.
So if we take a look at the UStoday and as of this recording,
there are 67 companies that arereferred to as dividend
(02:12):
aristocrats.
So I'm going to show them up onthe screen here.
There's going to be a big listbecause there's 67 companies and
we're not going to have time togo through all of them.
If you're watching this video,feel free to pause.
You can review the list at yourown time.
I'll just mention a couple ofthe companies.
I'm not going to mention themall.
(02:33):
We can see up on the list.
We have Abbott Laboratories, wehave ADM, we have Caterpillar,
chevron Church and Dwight.
We also have companies likeCoca-Cola, colgate, palm Olive,
exxon, general Dynamics, ibm,and then we have McDonald's,
(02:56):
lowe's, procter Gamble.
So these are a lot of thecompanies.
You will recognize ourhousehold names.
We also have Johnson Johnson onthe list.
And then we also have Stanley,Black Decker, walmart, and so
these are the types of companiesthat are on this list.
So there's 67, as of thisrecording, that are dividend
(03:19):
aristocrats, which means thatthey have been paying dividends
and increasing dividendsconsecutively for 25 years or
more.
Now let's take a look at Canada.
Now, if you Google dividendaristocrats for Canadian
companies, you're going to finddifferent results.
(03:41):
A lot of the sites out thereare showing that for Canada, as
long as a company has had fiveyears of consecutive dividend
increases, then they willconsider it to be a Canadian
dividend aristocrat.
But I'm not going to do that.
I'm going to be a littledifferent.
I want to compare apples toapples.
(04:02):
So here's my criteria, or mydefinition for a Canadian
company to be selected as adividend aristocrat.
So, of course, it must be aCanadian publicly traded company
.
And then the second requirementis going to be the same as what
we had for the US companies itmust be a company that has had
(04:23):
25 years or more of consecutivedividend increases.
So when we take a look at that,we see that today, as of this
recording, in Canada there are10 companies that meet that
criteria.
So 10 dividend aristocrats.
You can see the list up on thescreen now.
We have Atco, we have CanadianNational Railway, canadian
(04:48):
Utilities, empire, enbridge,fortis, imperial Oil, metro,
thomas, reuters and TourmontIndustries.
So those are the 10 Canadiancompanies that are the dividend
aristocrats.
Now let's move on to our nextdefinition what are dividend
(05:09):
kings?
So the requirement for this isactually quite simple it's that
a company must have had, or has,50 years or more of consecutive
dividend increases.
Now think about this 50 yearsis a very long time.
(05:29):
These companies have raised andpaid dividends through 7
recessions through an oilembargo in 1973 and 74, through
double-digit interest rates inthe 1980s, through Black Monday
1987, through 9-11, the dot-combubble in 99 and 2000, the 2008
(05:52):
financial crisis and then, mostrecently, the coronavirus crash
of 2020.
So that is a lot of marketdownturns and a lot of market
crashes over the last 50 years.
But in the US alone, as of thisrecording, there are 56
(06:13):
companies that we can refer toas dividend kings.
Again, I'm not going to gothrough the list of all 56
companies.
They are up on the screen here.
Feel free to pause the videoand you can take a look at the
list.
I'll highlight some of them onthe screen now, and then we're
going to move on to the Canadiancompanies.
(06:34):
So right now we're just lookingat the US companies and there's
56 dividend kings.
So these are companies like,again, colgate, palm Olive, so a
lot of the same names willrepeat themselves here.
Adm is on the list as well.
Again, abbott Laboratories isthere, we have Coca-Cola, we
(06:55):
have Lowe's, pepsi, johnson,johnson, and then we also have
Stanley, black and Decker, we'vegot Walmart.
So these companies are all partof the dividend kings.
So that's an impressive trackrecord of 50 years or more of
(07:15):
consecutive dividend increases.
Now when we look at Canada andwe apply the same rule, the list
is much, much smaller.
And, as of this recording,there is one company in Canada
which we can now refer to as adividend king, and that is
Canadian Utilities.
They have had, in fact, 51years of consecutive dividend
(07:42):
increases.
Now let's take a look at twoexamples of companies one in the
US, one in Canada of companiesthat have been paying the
dividend for the most amount oftime.
So when we take a look in theUS, there is one company that
holds the record as an Americancompany that has been paying a
(08:04):
dividend for the longest amountof time, and that company is the
York Water Company.
They have been paying dividendssince 1816.
That is more than 207 years ofpaying dividends.
That's an incredible trackrecord.
(08:25):
So I'm gonna say it again thiscompany has been paying
dividends since 1816, whichmeans they've been paying a
dividend for over 207 years.
So, again, an incredible trackrecord.
Think about how many marketcrashes we've had, how many
(08:45):
market recessions we've had inthe last 200 years, but yet this
company has continued to pay adividend year after year after
year, which is an incredible,incredible track record.
Now let's take a look at aCanadian company.
So there's one company inCanada that holds the record for
(09:08):
paying the dividend for thelongest amount of time, and that
is the Bank of Montreal.
They have been paying dividendssince 1829.
So that is 194 years more than194 years of paying a dividend,
(09:29):
which is, again, incredible.
Think of how many marketcrashes, how many recessions
over the last 190 years.
But this company, the Bank ofMontreal, has been consistently
paying dividends.
So, as a dividend investor,that is a remarkable track
record.
If you're looking for companiesthat are gonna be around for the
(09:51):
long term, that have a trackrecord of consistent, reliable
dividends, these are the kindsof companies you wanna look at.
Take a look at the dividendaristocrats, the dividend kings.
Take a look at these twocompanies that have been paying
dividends for the most amount oftime.
So that's an impressive trackrecord to look at.
(10:12):
Now let's move on to our finaltopic in this video, and I'm
gonna share with you threeexamples of extraordinary
returns of dividend stocks.
So these are real life examples, and it highlights the
possibilities of what ispossible when it comes to making
(10:35):
dividend income and to growingyour portfolio through capital
gains as well, and so you'regonna see some extraordinary
returns, but this is allpossible.
So let's take a look.
We're gonna start first withCoca-Cola.
Now, coca-cola has had 62 yearsof consecutive dividend
(10:59):
increases.
That is still an impressivetrack record.
Now, if we take a look at theCoca-Cola stock price chart
that's up on the screen rightnow, we're looking at the last
38 years.
I wish I could go further back,but unfortunately, this graph
that we're looking at only goesback 38 years, so it's about
(11:20):
almost 40 years, right?
Yeah, I wish it would go back50 or 60 years, but this is what
we can look at today, which isstill very impressive.
So, over the last almost 40years, you can see the Coca-Cola
stock price has gone up anddown.
That's the blue line up on thescreen and what's impressive is
(11:42):
the orange line.
The orange line represents theDividends and you can see that
the line goes up year after yearafter year after year.
It never goes down Because,like I said, we're looking at
the 40 year chart here.
In fact, coca-cola hasconsecutively increased
(12:03):
dividends for more than 62 years, so the dividend keeps going up
.
But take a look at the stockprice.
There's times when the stockprice drops by five dollars a
share, ten dollars a share, evenmore than twenty dollars a
share Drop in the stock price.
So how can a company like thiscontinue to not only pay a
(12:24):
dividend but increase a dividendwhen its own stock price Tanks?
And the reason is that thedividends are not paid From the
stock price.
The dividends are paid from theearnings and and.
As long as the company isprofitable over the long term
and the earnings are growing,then the company can afford To
(12:48):
not only pay the dividend butalso increase the dividend as
well.
So that's why, for us, asdividend investors, the dividend
and and the dividend income isa much higher priority and much
higher focus for us, then thestock price.
(13:10):
Stock prices are fleeting.
They go up and down all thetime.
You could have a stock thatgoes up ten dollars a share
today and then it drops by tendollars a share tomorrow or by
twenty dollars a share, right.
So stock prices go up and downall the time, but what we can
rely on for Providing us withincome, an immediate return on
(13:30):
our investment while we hold onto the shares, is, in fact, the
dividend.
So now we're going to take alook at three examples of
extraordinary returns.
Now, if anybody is interestedin learning more about the
details and the specifics, Icover all of that in episode
seven.
So I encourage you to go backand watch episode seven if you
(13:54):
want to learn more about theextraordinary returns that you
can get with dividend stocks,just to see what's possible.
But in today's episode, rightnow, we're going to jump into
three examples.
So I'm going to show you anexample with Coca-Cola, home
Depot and Walmart.
Now here's the thing withdividends at the beginning, the
(14:15):
dividends will feel very small,almost insignificant.
But over time and as I've shownyou with the dividend
aristocrats, the dividend kingsis over time, over decades, the
dividends keep going up everyyear and every time the dividend
is increased, that's more moneyin your pocket as a dividend
(14:38):
investor.
So over time you will start toearn more in dividends and as
you start to reinvest thosedividends and as you start to
get more and more dividends,you're able to invest more and
more money.
So there's almost a snowballeffect.
That happens in the later yearsbut not in the beginning.
So anyway, let's stick withthis example for now.
(14:59):
Like I said, episode seven hasgot more details in there, but
we're going to take some generalamounts of investments and see
what happens over time.
So with Coca-Cola we're goingto start in 1960, home Depot
1981, walmart 1970.
So let's start with Coca-Cola.
In 1960, had you invested$4,600 in Coca-Cola stock and
(15:25):
just held onto it you didn't buyor sell any more shares, you
just held onto it.
Today that investment would beworth over $7 million.
So think about that A $4,600investment eventually turned
into over $7 million in totalvalue.
(15:47):
But what's even better is thatthose shares in Coca-Cola today
would provide you with over$200,000 a year in dividend
income.
If you want to be specific,it's $202,752.
(16:08):
So that is an extraordinaryreturn.
Let's move on to Home Depot, andHome Depot we're going to say
let's say you started in 1981and you invest $2,100 in Home
Depot, that investment todaywould be worth over $10.8
million.
And even better, thatinvestment today would provide
(16:30):
you with more than $259,000 ayear in dividend income.
And again, you didn't have tobuy or sell more shares, you
just had to hold onto them forthat many years.
And the last example is Walmart.
And so Walmart in 1970, had youinvested $1,650, in the last
(16:50):
year you would have to buy orsell more shares.
And in 1970, had you invested$1,650 in Walmart in 1970 and
just held onto it, those sharestoday would be worth over $29.2
million.
And it gets even better thoseshares today would provide you
(17:11):
with over $458,000 in annualdividend income.
So that's this year, and thennext year, hopefully with
dividend increases, it would beeven more than $458,000 in
dividend income.
All three companies have asolid track record of increasing
(17:34):
their dividend year after yearafter year.
So if we add it all up as acombined portfolio, just in
three companies Coca-Cola, homeDepot, walmart total investment
would have been $8,350.
And that's it.
You just would have sat on that$8,350 total investment.
(17:59):
Combined, those shares would beworth over $47.2 million today,
which is incredible.
Even better, just those threecompanies alone, your annual
dividend income would be over$921,000 a year in dividend
(18:20):
income.
Now I know what some of you arethinking 1960, 1970, 1981 that
is a long time ago.
Some of you weren't even bornthen.
But consider, look at thenumbers on the screen.
If you achieve even half ofthat, or even 20% of that, or
(18:42):
even 10% of that, it is anincredible achievement.
And you didn't have to start 40, 50, 60, 70 years ago.
You could have started 5, 10,15, 20 years ago.
Right started investing.
So it's the decisions you maketoday that will impact your
(19:03):
Dividend income and yourlivelihood in the future.
So does that mean that youshould go out and buy any stock
today that pays a dividend?
And the short answer is no.
There's a couple of more thingsthat we need to look at before
you can invest in any dividendstock.
So our approach is to invest inquality, dividend paying Stocks
(19:26):
when they are priced low.
So the key word here is notjust any stock has to be a
dividend stock, not just anydividend stock has to be a
quality stock and not just anyquality stock.
It has to be priced low.
It's got to be undervalued,okay, not priced high.
If it's priced too high, thenwe're not interested in
(19:46):
investing in that.
So how do you know, when you'relooking at any stock anywhere
in the world?
How do you know, when you'relooking at it, if it's a quality
stock, if it's a dividend stockand if it's priced low?
So for that I've created what Icall the 12 rules of simply
investing.
This is your checklist.
A company has to pass all ofall 12 rules before you invest
(20:08):
in it.
If it fails even one rule, skipit, move on to something else.
So this list is going to reduceyour risk and and maximize your
gains.
So you can see all of the 12rules up on the screen here.
Rule number one Do youunderstand how the company is
making money?
If not, skip it, move on tosomething else.
(20:30):
Rule number two 20 years fromnow, will people still need its
product and services?
Rule number three does thecompany have a low-cost
competitive advantage?
Rule number four Is itrecession proof?
Rule number five Is itprofitable?
Rule number six Does it growits dividend?
Rule number seven Can it affordto pay the dividend?
Rule number eight is the debtless than 70%?
(20:52):
Rule number nine avoid anycompany with recent dividend
cuts.
Rule number ten does it buyback its own chairs?
Rule number eleven is stockpriced low.
That's where we look at the P?
E ratio, the PB ratio, and wealso compare the current yield
to the company's 20 year averagedividend yield.
And rule number 12 keep youremotions out of investing.
(21:15):
So, for those of you that areinterested, I've created an
online course.
It's a self-paced online coursethe simply investing dividend
course and it covers Everythingthat you see on the screen here.
There's 10 modules.
The first module we covered theinvesting basics.
Module two we cover the 12rules of simply investing.
(21:36):
Module three you learn how toapply the 12 rules Using a
Google sheet.
Module four you learn how touse a simply investing platform.
Module five Placing your firststock order.
So we show you how to do that,step by step.
Module six building andtracking your portfolio.
Module seven went to sell,which is just as important as to
(21:58):
know when to buy.
Module eight how to reduce yourfees and risk, especially when
it comes to mutual funds, indexfunds and ETFs.
Module nine your action planfor getting started Right away.
And module 10 answering yourmost frequently asked questions.
We also have the simplyinvesting platform that applies
these rules to over 6000companies in the US and in
(22:22):
Canada every single day.
So immediately you can seewhich companies pass which of
the rules, which companies failwhich of the rules.
So if there's companies thatare overvalued, then you know
that you can skip them for nowand Focus on something else.
So if anybody is interested inthe course or the platform, you
(22:42):
may want to write down thecoupon code we have save 10.
S, a, v, e.
1 0.
Save 10 is going to save you 10percent off of our course or
the platform.
So if you enjoy today's video,be sure to hit the subscribe
button.
We have a new episode out everyweek.
Hit the like button as well andfor more information, take a
(23:04):
look at our website.
Simply investing calm.
Thanks for watching.
In this episode we'll cover what are dividend
aristocrats and dividend kingsin the US and in Canada.
Hi, my name is Kanwal Sarai andwelcome to the Simply Investing
Dividend Podcast.
In this episode, we're going tocover the following five topics
(00:21):
.
We'll start off with what aredividends, then we're going to
take a look at what are dividendaristocrats, then we'll look at
what are dividend kings, andthen we'll take a look at two
examples of companies one in theUS and one in Canada with the
longest dividend paying streak,and then, finally, we'll take a
(00:44):
look at some real-life examplesof extraordinary returns.
So dividends are essentiallythe company sharing its profits
with you, the shareholder.
So, for example, if a companyis paying a dividend of $1 per
share and you own 1,000 shares,you will receive $1,000 for
(01:04):
every year for as long as youown those shares and as long as
the company continues to pay thedividend.
Now you can spend that money ifyou wish, or you can reinvest
it.
The dividends are depositeddirectly into your trading
account as cash and we'll take alook later on in this episode
as to what happens to thedividend when the share price
(01:26):
drops or if the share price goesup.
Now let's move on to our nexttopic in this episode, and that
is what are dividend aristocrats?
Now, it's really simple.
There's only two criteria thata company has to meet when it
comes to dividend aristocrats inthe US.
So, first off, the company mustbe part of the SNMP 500.
(01:49):
And then the second requirementis that the company has had 25
years or more of consecutivedividend increases.
So if we take a look at the UStoday and as of this recording,
there are 67 companies that arereferred to as dividend
(02:12):
aristocrats.
So I'm going to show them up onthe screen here.
There's going to be a big listbecause there's 67 companies and
we're not going to have time togo through all of them.
If you're watching this video,feel free to pause.
You can review the list at yourown time.
I'll just mention a couple ofthe companies.
I'm not going to mention themall.
(02:33):
We can see up on the list.
We have Abbott Laboratories, wehave ADM, we have Caterpillar,
chevron Church and Dwight.
We also have companies likeCoca-Cola, colgate, palm Olive,
exxon, general Dynamics, ibm,and then we have McDonald's,
(02:56):
lowe's, procter Gamble.
So these are a lot of thecompanies.
You will recognize ourhousehold names.
We also have Johnson Johnson onthe list.
And then we also have Stanley,Black Decker, walmart, and so
these are the types of companiesthat are on this list.
So there's 67, as of thisrecording, that are dividend
(03:19):
aristocrats, which means thatthey have been paying dividends
and increasing dividendsconsecutively for 25 years or
more.
Now let's take a look at Canada.
Now, if you Google dividendaristocrats for Canadian
companies, you're going to finddifferent results.
(03:41):
A lot of the sites out thereare showing that for Canada, as
long as a company has had fiveyears of consecutive dividend
increases, then they willconsider it to be a Canadian
dividend aristocrat.
But I'm not going to do that.
I'm going to be a littledifferent.
I want to compare apples toapples.
(04:02):
So here's my criteria, or mydefinition for a Canadian
company to be selected as adividend aristocrat.
So, of course, it must be aCanadian publicly traded company
.
And then the second requirementis going to be the same as what
we had for the US companies itmust be a company that has had
(04:23):
25 years or more of consecutivedividend increases.
So when we take a look at that,we see that today, as of this
recording, in Canada there are10 companies that meet that
criteria.
So 10 dividend aristocrats.
You can see the list up on thescreen now.
We have Atco, we have CanadianNational Railway, canadian
(04:48):
Utilities, empire, enbridge,fortis, imperial Oil, metro,
thomas, reuters and TourmontIndustries.
So those are the 10 Canadiancompanies that are the dividend
aristocrats.
Now let's move on to our nextdefinition what are dividend
(05:09):
kings?
So the requirement for this isactually quite simple it's that
a company must have had, or has,50 years or more of consecutive
dividend increases.
Now think about this 50 yearsis a very long time.
(05:29):
These companies have raised andpaid dividends through 7
recessions through an oilembargo in 1973 and 74, through
double-digit interest rates inthe 1980s, through Black Monday
1987, through 9-11, the dot-combubble in 99 and 2000, the 2008
(05:52):
financial crisis and then, mostrecently, the coronavirus crash
of 2020.
So that is a lot of marketdownturns and a lot of market
crashes over the last 50 years.
But in the US alone, as of thisrecording, there are 56
(06:13):
companies that we can refer toas dividend kings.
Again, I'm not going to gothrough the list of all 56
companies.
They are up on the screen here.
Feel free to pause the videoand you can take a look at the
list.
I'll highlight some of them onthe screen now, and then we're
going to move on to the Canadiancompanies.
(06:34):
So right now we're just lookingat the US companies and there's
56 dividend kings.
So these are companies like,again, colgate, palm Olive, so a
lot of the same names willrepeat themselves here.
Adm is on the list as well.
Again, abbott Laboratories isthere, we have Coca-Cola, we
(06:55):
have Lowe's, pepsi, johnson,johnson, and then we also have
Stanley, black and Decker, we'vegot Walmart.
So these companies are all partof the dividend kings.
So that's an impressive trackrecord of 50 years or more of
(07:15):
consecutive dividend increases.
Now when we look at Canada andwe apply the same rule, the list
is much, much smaller.
And, as of this recording,there is one company in Canada
which we can now refer to as adividend king, and that is
Canadian Utilities.
They have had, in fact, 51years of consecutive dividend
(07:42):
increases.
Now let's take a look at twoexamples of companies one in the
US, one in Canada of companiesthat have been paying the
dividend for the most amount oftime.
So when we take a look in theUS, there is one company that
holds the record as an Americancompany that has been paying a
(08:04):
dividend for the longest amountof time, and that company is the
York Water Company.
They have been paying dividendssince 1816.
That is more than 207 years ofpaying dividends.
That's an incredible trackrecord.
(08:25):
So I'm gonna say it again thiscompany has been paying
dividends since 1816, whichmeans they've been paying a
dividend for over 207 years.
So, again, an incredible trackrecord.
Think about how many marketcrashes we've had, how many
(08:45):
market recessions we've had inthe last 200 years, but yet this
company has continued to pay adividend year after year after
year, which is an incredible,incredible track record.
Now let's take a look at aCanadian company.
So there's one company inCanada that holds the record for
(09:08):
paying the dividend for thelongest amount of time, and that
is the Bank of Montreal.
They have been paying dividendssince 1829.
So that is 194 years more than194 years of paying a dividend,
(09:29):
which is, again, incredible.
Think of how many marketcrashes, how many recessions
over the last 190 years.
But this company, the Bank ofMontreal, has been consistently
paying dividends.
So, as a dividend investor,that is a remarkable track
record.
If you're looking for companiesthat are gonna be around for the
(09:51):
long term, that have a trackrecord of consistent, reliable
dividends, these are the kindsof companies you wanna look at.
Take a look at the dividendaristocrats, the dividend kings.
Take a look at these twocompanies that have been paying
dividends for the most amount oftime.
So that's an impressive trackrecord to look at.
(10:12):
Now let's move on to our finaltopic in this video, and I'm
gonna share with you threeexamples of extraordinary
returns of dividend stocks.
So these are real life examples, and it highlights the
possibilities of what ispossible when it comes to making
(10:35):
dividend income and to growingyour portfolio through capital
gains as well, and so you'regonna see some extraordinary
returns, but this is allpossible.
So let's take a look.
We're gonna start first withCoca-Cola.
Now, coca-cola has had 62 yearsof consecutive dividend
(10:59):
increases.
That is still an impressivetrack record.
Now, if we take a look at theCoca-Cola stock price chart
that's up on the screen rightnow, we're looking at the last
38 years.
I wish I could go further back,but unfortunately, this graph
that we're looking at only goesback 38 years, so it's about
(11:20):
almost 40 years, right?
Yeah, I wish it would go back50 or 60 years, but this is what
we can look at today, which isstill very impressive.
So, over the last almost 40years, you can see the Coca-Cola
stock price has gone up anddown.
That's the blue line up on thescreen and what's impressive is
(11:42):
the orange line.
The orange line represents theDividends and you can see that
the line goes up year after yearafter year after year.
It never goes down Because,like I said, we're looking at
the 40 year chart here.
In fact, coca-cola hasconsecutively increased
(12:03):
dividends for more than 62 years, so the dividend keeps going up
.
But take a look at the stockprice.
There's times when the stockprice drops by five dollars a
share, ten dollars a share, evenmore than twenty dollars a
share Drop in the stock price.
So how can a company like thiscontinue to not only pay a
(12:24):
dividend but increase a dividendwhen its own stock price Tanks?
And the reason is that thedividends are not paid From the
stock price.
The dividends are paid from theearnings and and.
As long as the company isprofitable over the long term
and the earnings are growing,then the company can afford To
(12:48):
not only pay the dividend butalso increase the dividend as
well.
So that's why, for us, asdividend investors, the dividend
and and the dividend income isa much higher priority and much
higher focus for us, then thestock price.
(13:10):
Stock prices are fleeting.
They go up and down all thetime.
You could have a stock thatgoes up ten dollars a share
today and then it drops by tendollars a share tomorrow or by
twenty dollars a share, right.
So stock prices go up and downall the time, but what we can
rely on for Providing us withincome, an immediate return on
(13:30):
our investment while we hold onto the shares, is, in fact, the
dividend.
So now we're going to take alook at three examples of
extraordinary returns.
Now, if anybody is interestedin learning more about the
details and the specifics, Icover all of that in episode
seven.
So I encourage you to go backand watch episode seven if you
(13:54):
want to learn more about theextraordinary returns that you
can get with dividend stocks,just to see what's possible.
But in today's episode, rightnow, we're going to jump into
three examples.
So I'm going to show you anexample with Coca-Cola, home
Depot and Walmart.
Now here's the thing withdividends at the beginning, the
(14:15):
dividends will feel very small,almost insignificant.
But over time and as I've shownyou with the dividend
aristocrats, the dividend kingsis over time, over decades, the
dividends keep going up everyyear and every time the dividend
is increased, that's more moneyin your pocket as a dividend
(14:38):
investor.
So over time you will start toearn more in dividends and as
you start to reinvest thosedividends and as you start to
get more and more dividends,you're able to invest more and
more money.
So there's almost a snowballeffect.
That happens in the later yearsbut not in the beginning.
So anyway, let's stick withthis example for now.
(14:59):
Like I said, episode seven hasgot more details in there, but
we're going to take some generalamounts of investments and see
what happens over time.
So with Coca-Cola we're goingto start in 1960, home Depot
1981, walmart 1970.
So let's start with Coca-Cola.
In 1960, had you invested$4,600 in Coca-Cola stock and
(15:25):
just held onto it you didn't buyor sell any more shares, you
just held onto it.
Today that investment would beworth over $7 million.
So think about that A $4,600investment eventually turned
into over $7 million in totalvalue.
(15:47):
But what's even better is thatthose shares in Coca-Cola today
would provide you with over$200,000 a year in dividend
income.
If you want to be specific,it's $202,752.
(16:08):
So that is an extraordinaryreturn.
Let's move on to Home Depot, andHome Depot we're going to say
let's say you started in 1981and you invest $2,100 in Home
Depot, that investment todaywould be worth over $10.8
million.
And even better, thatinvestment today would provide
(16:30):
you with more than $259,000 ayear in dividend income.
And again, you didn't have tobuy or sell more shares, you
just had to hold onto them forthat many years.
And the last example is Walmart.
And so Walmart in 1970, had youinvested $1,650, in the last
(16:50):
year you would have to buy orsell more shares.
And in 1970, had you invested$1,650 in Walmart in 1970 and
just held onto it, those sharestoday would be worth over $29.2
million.
And it gets even better thoseshares today would provide you
(17:11):
with over $458,000 in annualdividend income.
So that's this year, and thennext year, hopefully with
dividend increases, it would beeven more than $458,000 in
dividend income.
All three companies have asolid track record of increasing
(17:34):
their dividend year after yearafter year.
So if we add it all up as acombined portfolio, just in
three companies Coca-Cola, homeDepot, walmart total investment
would have been $8,350.
And that's it.
You just would have sat on that$8,350 total investment.
(17:59):
Combined, those shares would beworth over $47.2 million today,
which is incredible.
Even better, just those threecompanies alone, your annual
dividend income would be over$921,000 a year in dividend
(18:20):
income.
Now I know what some of you arethinking 1960, 1970, 1981 that
is a long time ago.
Some of you weren't even bornthen.
But consider, look at thenumbers on the screen.
If you achieve even half ofthat, or even 20% of that, or
(18:42):
even 10% of that, it is anincredible achievement.
And you didn't have to start 40, 50, 60, 70 years ago.
You could have started 5, 10,15, 20 years ago.
Right started investing.
So it's the decisions you maketoday that will impact your
(19:03):
Dividend income and yourlivelihood in the future.
So does that mean that youshould go out and buy any stock
today that pays a dividend?
And the short answer is no.
There's a couple of more thingsthat we need to look at before
you can invest in any dividendstock.
So our approach is to invest inquality, dividend paying Stocks
(19:26):
when they are priced low.
So the key word here is notjust any stock has to be a
dividend stock, not just anydividend stock has to be a
quality stock and not just anyquality stock.
It has to be priced low.
It's got to be undervalued,okay, not priced high.
If it's priced too high, thenwe're not interested in
(19:46):
investing in that.
So how do you know, when you'relooking at any stock anywhere
in the world?
How do you know, when you'relooking at it, if it's a quality
stock, if it's a dividend stockand if it's priced low?
So for that I've created what Icall the 12 rules of simply
investing.
This is your checklist.
A company has to pass all ofall 12 rules before you invest
(20:08):
in it.
If it fails even one rule, skipit, move on to something else.
So this list is going to reduceyour risk and and maximize your
gains.
So you can see all of the 12rules up on the screen here.
Rule number one Do youunderstand how the company is
making money?
If not, skip it, move on tosomething else.
(20:30):
Rule number two 20 years fromnow, will people still need its
product and services?
Rule number three does thecompany have a low-cost
competitive advantage?
Rule number four Is itrecession proof?
Rule number five Is itprofitable?
Rule number six Does it growits dividend?
Rule number seven Can it affordto pay the dividend?
Rule number eight is the debtless than 70%?
(20:52):
Rule number nine avoid anycompany with recent dividend
cuts.
Rule number ten does it buyback its own chairs?
Rule number eleven is stockpriced low.
That's where we look at the P?
E ratio, the PB ratio, and wealso compare the current yield
to the company's 20 year averagedividend yield.
And rule number 12 keep youremotions out of investing.
(21:15):
So, for those of you that areinterested, I've created an
online course.
It's a self-paced online coursethe simply investing dividend
course and it covers Everythingthat you see on the screen here.
There's 10 modules.
The first module we covered theinvesting basics.
Module two we cover the 12rules of simply investing.
(21:36):
Module three you learn how toapply the 12 rules Using a
Google sheet.
Module four you learn how touse a simply investing platform.
Module five Placing your firststock order.
So we show you how to do that,step by step.
Module six building andtracking your portfolio.
Module seven went to sell,which is just as important as to
(21:58):
know when to buy.
Module eight how to reduce yourfees and risk, especially when
it comes to mutual funds, indexfunds and ETFs.
Module nine your action planfor getting started Right away.
And module 10 answering yourmost frequently asked questions.
We also have the simplyinvesting platform that applies
these rules to over 6000companies in the US and in
(22:22):
Canada every single day.
So immediately you can seewhich companies pass which of
the rules, which companies failwhich of the rules.
So if there's companies thatare overvalued, then you know
that you can skip them for nowand Focus on something else.
So if anybody is interested inthe course or the platform, you
(22:42):
may want to write down thecoupon code we have save 10.
S, a, v, e.
1 0.
Save 10 is going to save you 10percent off of our course or
the platform.
So if you enjoy today's video,be sure to hit the subscribe
button.
We have a new episode out everyweek.
Hit the like button as well andfor more information, take a
(23:04):
look at our website.
Simply investing calm.
Thanks for watching.
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