At school, you were probably told that you should do well so that you could get a job when you graduated. After that, you work several days a week year after year to get that monthly salary, because that’s how it should be. Or is it?
Something that is not mentioned much in school was investments, at least not when I read (or maybe I wasn’t so observant). That you can make your money grow on its own without going to a day job was something completely unknown then. After a couple of years in working life, I have picked up some investment tips and then done my own research afterwards and an investment strategy that I liked and stuck a bit to is the dividend strategy.
For those who have not heard of the dividend strategy, it is simply a matter of buying companies that pay dividends from the profits each year. Then you buy more shares from the same or other companies that also pay dividends. What happens is similar when you roll a snowball down a hill, in the beginning it is small and you have to push a little and when the snowball rolls it gets bigger. Finally, the snowball rolls by itself. In other words, the dividend is only growing and growing.
- You do not have to time the market
- Constant cash flow
- Rarely do companies drop the dividend
- Easy to be fooled by high dividends
- You miss stock rockets
My basic criteria when choosing a company for the dividend:
- Long-term, Must be prepared to own the company for a longer period of time.
- Must have increased dividends for several years in a row.
- The company is making a profit
It should be added that these are my personal criteria and should not be considered as advice.