Show 65 - Dividend Investing a Crash Course with Kanwal Sarai
In this episode, I talk with Kanwal Sarai from Simply Investing about all the basics you need to know about dividend stocks.
12/25/20241 min read
Dividend investing is a great way to build wealth over the long term that also pays out in cashflow, which gives freedom. But, to invest correctly in dividends, it is important to get the education you need to do it right. Kanwal shares his 12 steps to choosing the right dividen stocks in this episode. It is so insightful I can’t believe he’s giving this information away for free!
Show Notes
How to Save Money on a Teacher's Salary
Recommended Books (Amazon Affiliate Links)
Key Ideas
Do you understand the company?
Will people still be using it in 20 years?
Does it have a low cost lasting competitive advantage?
Is the company recession proof?
Is the company profitable (20 year earning growth 8% or more, and earnings increases in the last 20 years at least 8)
Is the company’s dividend growth 8% or more of 20 years?
Is the company’s pay out ratio under 75%?
Is the company’s debt level low?
Has the company had a recent dividend cut?
Does the company actively buy back its shares?
Is the stock priced low (A. a PU ratio 25 or less, B. the current dividend yield is higher than 20 year average dividend yield, C. the PB ratio is 3 or less).
Can you stay the course?
Bonus Tip
Here is a bonus tip I didn't get to in the episode.
If you are looking to retire early before your pension kicks in you’ll want to have cashflow coming in from somewhere while you wait for your pension. Dividends are an ideal way to bridge this gap. If you can get your dividend payout to be greater than your basic expenses you can cashflow those years waiting for a pension. Even if you don’t completely cover them, any little bit helps!