Hello all! I apologize that we missed out on this week’s money project Monday, I was in Baltimore for the Fell’s Point Festival. Fear not, a new money project is in the works and we’ll get back on track next Monday, sound good?
Today I’d like to talk a little bit about my own personal investment style. Like a few other finance bloggers out there, I’m firmly in the camp of dividend investing. Rather than comb the wasteland of the stock market for the next Google, I confidently pluck away at companies that have consistently increased dividends as well as provided capital appreciation. To many it sounds boring, but to me, the compounding one-two punch of reinvested dividends and increasing stock price makes for a pretty powerful money machine! When it comes to retirement, inflation is always my biggest worry. So my hope is to build up enough investments in dividend-paying companies that throw off enough cash to cover my expenses while the dividend payments increase at least as quickly as inflation.
So where to begin? We’ll start with my favorite dividend-paying ETF of all time: DVY. This is also known as Ishares Dow Jones Select Dividend Index Fund. This index is made up of some of the best dividend paying companies of the Dow, including one of the best performing stocks of all time: Altria (I don’t like smoking either, but I also don’t like to transfer my morals into my portfolio. As always, do what works for you). The ETF has fairly low expenses (0.40%) and sports a solid yield of roughly 3%.
Be warned though, that like most dividend-focused ETFs you are going to have a big bite of the financial sector (that being said, so does the S&P500). Expect some volatility if the banks are getting thrashed (see: subprime mortgage mess).
See for yourself if DVY fits you.
-Xias