1. There aren't many 5% dividend stocks around. To pick 10 that are quality is difficult to impossible. A more realistic dividend expectation would be 2% to 4%.
2. Buying 10 different stocks at $1,000, your commissions would be at least $7 per buy, which is 0.7%. Now your dividend is effectively cut to a net of 1.3% to 3.3% since you spent some on commissions. I would cut the number of stocks to 5 or even 3.
3. A 5% dividend doesn't guarantee a good return if the stock price falls. Plus appreciation is not as good when the market booms. I have owned T for the past few years and haven't really made much money on it, I would say it's near the bottom of my portfolio in performance. In the meanwhile, I also own DIS at a 1% dividend and have made 50% in a year or two.
With significant growth in the three major indices, each up at least 20% YTD, this past year has rewarded equity investments. Depending on the type of investor you are, a dividend stock may benefit your portfolio by adding additional returns on top of capital gains. Dividend stocks are subject to the market just like growth stocks, but behave differently. Read more here:
http://iknowfirst.com/Best_Dividend_Stoc...
Look into DVY or VIG.
Less commission fees. More diversity. More safety.
Buy. Reinvest the dividends. Add more on a timely basis. Wait 30 years and retire wealthy.
It's going down
Whats your opinion on this approach. I'm young and newer to investing...
Ex. Buy 10 different stocks (roughly 5% yield) at 1k each
Each year i reinvest the $500 dividends into a completely different stock
The following year (if the stocks don't change) i would have 11 different stocks (10 at 1k and 1 at $500)
Whats everyones thought on this approach, especially with the way the market is now
I see stocks like att, pom, ...at 5% yield that seem to be fairly stable over the last 20 years and offer decent dividends
