Dividend stock love

I’ve fallen in love with dividend stocks – I don’t know why, but I’ve never paid much attention to them and have always just focused on long-term gain. How short-sighted of me though! Several months ago, my co-worker was talking about his father living solely off of dividend income for the past ten years. He has only begun tapping into social security and 401k. It took me a few minutes to absorb, and my first reaction was “That’s crazy! How many millions does he have invested?!”

But upon second thought, it’s not that crazy. Assuming a 4% quarterly return (a reasonably conservative estimate), to bring in $5,000/mo ($15k/quarter), you would need to have $375,000 invested. Broken out over 20 years worth of saving, that would be slightly over $1500/month to save. Even if you could manage to put aside $500/month, after 20 years, your dividends would be bringing in a cool $1600/mo, not to mention what they would be earning you during this time! If you just reinvested those earnings, it would increase that much more. This is so motivating.

I have a work 401k which is pretty much on autopilot, but I plan on monitoring that much more closely in the future. We have a separate stock account that we purchased random stocks (read: trendy and overpriced). Throughout the past few years, I’ve managed to pick up a few dividend stocks, and while they haven’t done amazingly well in terms of growth, dividends have generated on average of 5-10% on average for the past few years.

What are your thoughts on dividend stocks?

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