Character: The Dividend Investor
Level 1
Thinking about dividend investing
Level 2
Actively learning about dividend investing
Level 3
Bought first dividend paying stock
Level 4
Bought 10x well-researched dividend paying stocks
Level 5
Own $10,000 in dividends
Level 6
Own $50,000 in dividends
Level 7
Own $100,000 in dividends
Level 8
Own $200,000 in dividends
Level 9
Dividends can pay for your monthly expenses
Level 10
Dividend Educator - actively spreading knowledge to the community
Character Description:
The Dividend Investor is a special type of stock investor that invests in dividend-paying companies. A dividend is a share of a company’s profits distributed to its shareholders – you, the stock investor. Not all stocks have dividends, but you can easily look up the ones that do and have a great track record. You can essentially own shares of a great company that pay you just by owning it.

There are a couple of key points you must understand when investing in dividends:
1. The Role of Dividends
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Dividends provide you cashflow, but this cashflow is not as high as real estate
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Regardless it can set a foundation that will provide for your lifestyle
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So in the OBL Financial Freedom Algorithm, The goal is to use the cashflow generated by real estate and dividends to pay for all of your monthly expenses.
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But the question is, how much do you really need for it to make a difference? Let’s do some math.
2. The Math
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So on average, a good mix of great companies in a fairly diversified dividend portfolio will yield around 3% annually. There are companies that pay you higher yields, but they tend to have poorer financial statements thus making them riskier for cutting dividends or riskier as an investment in general.
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So let’s take an example of $100,000, which is already a lot for the average person. $100,000 invested in solid companies that pay dividends will conservatively yield an average of 3% a year, which is $3000 a year. In monthly terms, that will be $250 a month in cashflow for life.
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Dividends are usually paid quarterly
3. Strengths:
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Dividends is a long term strategy, but also has the short and medium term built in. You get paid the whole way and can be a reliable income stream if you invest in great companies with a great track record. There are solid companies that have been paying and/or increasing their dividends for decades and will likely remain that way in the foreseeable future.
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If you live off of dividends, a major pro is in taxes. As of 2020, long term capital gains if you are generating less than $80,000 a year in qualified dividend income means you will pay 0% in federal taxes. ($40,000 for single filers).
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Dividends are much more liquid and easy to get into compared to real estate.
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Low barrier to entry: You could literally invest in one in a matter of a few clicks or swipes
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Dividend yields can increase depending on how a company is doing.
4. Weaknesses:
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Companies can also reduce or even cancel their dividends, but that’s less likely if you invest in the solid companies with great track records.
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The average yield from dividends is low and you will need to invest a significant amount in order for the cash flow it generates to make substantial difference, but nonetheless it’s a solid part of anyone’s portfolio.
