- a) What's the dividend payout ratio?
- b) What's the dividend growth rate for the past 5 and/or 10 years?
Singapore Man of Leisure (welcome to my blog; just google it!)
When you buy computer software, especially games, there's a minimum PC requirements and recommended requirements.
We quickly learn that it' best to ignore the minimum PC requirements...
If a person wishes to have a dividend income of $50,000 per year starting this year (notice I omitted the word passive), I guess the recommended capital would be $2 million dollars at 5% yield.
Wait!? My math don't add up you may say.
Let's park this question for now and explore other alternatives:
1) $1 million at 5% yield
This will get you the $50,000 per year you so desired. But the price to pay is you are 100% all-in. No opportunity fund or dry gunpowder. No ballast.
That means you have lived through the May 2013 taper tantrum where have experienced how income stocks all got whacked in the head - some more than others. And you totally OK with the temporary capital loss. You are confident that your income stocks will recover eventually - like it did currently now. You speak with conviction as you have lived through that experience. You know what you are doing.
I would rate this strategy as minimum requirement to get $50,000 dividend income per year.
2) $500K at 10% yield
That's obvious isn't it? And that's what newbie income "investors" normally chooses.
This stock is yielding 4% but this one one is yielding 8%... Buy the 8% one! Easy!
If only they stop and reflect for a while why they are the only "smart" ones who can spot it. I mean why other investors are bidding the price up for that 4% dividend stock and not biting on the one which is yielding at 8%??? Don't other investors (especially the institutional ones) know math?
These newbies have probably not gone through May 2013 taper tantrum, never mind to have experience what it means that hell hath no fury like an income investor scorned - like during 2008/09.
How to spot these newbie income investors?
Just ask 2 questions and you'll know:
Singapore Man of Leisure (welcome to my blog; just google it!)
Singapore Man of Leisure (welcome to my blog; just google it!)
Yes, that is exactly my target also.
Unfortunately, unlikely to reach it – at most, hope for $1.5m principal at a presumably safe 3.5% draw-down (hopefully, touching only the dividends) plus longer working years.
ABC,
Have fun!
And don’t pay too much attention to what I say. This post is meant more as a satire…
I did not plan to “retire” at 44. Nor did I plan to increase my Trading Account by 6 times over the last 2 years…
Things just happen – as they always do.
What I am today has more to do with the decisions (or non-decisions) I’ve made yesterday – not the goals or plans I’ve made ;)