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Dividends, Investing

Would you like to earn more this year?

By Kanwal Sarai
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Would you like to know the fastest and easiest way to earn more this year?

The answer is...
The answer is dividends, but first let's take a look at some other ways to earn more:

  • learn new skills and/or apply for a new job
  • ask for a raise or promotion
  • buy a rental property
  • start a second job
  • start a business

All of the above suggestions require a lot of time, effort, and money. And in the case of real estate and starting your own business it could be years before you see a return on your investment.

Making passive income
Passive income does not require any more effort, but you do make money in the process. Remember dividends are profits that a company is sharing with you the shareholder (business owner). You get paid (dividends) just for holding on to shares in a company. You can choose to spend your dividends, or re-invest them, it's entirely up to you.

Here are some real life examples of companies and the dividends they are currently paying out.

Company Name | Stock Price | | Annual Dividend | | Return (dividend yield) |
Bell Canada (BCE) $61.25 $3.17/share 5.16%
Cineplex (CGX) $24.31 $1.74/share 7.16%
Enbridge (ENB) $49.94 $2.95/share 5.91%
IGM Financial (IGM) $36.52 $2.25/share 6.16%
Russel Metals (RUS) $21.50 $1.52/share 7.07%

$8000 invested in the following five companies would give you $503.36 in dividends annually.

Company Name | Amount Invested | | Dividend Yield | | Annual Dividends |
Bell Canada (BCE) $1600 5.16% $82.56
Cineplex (CGX) $1600 7.16% $114.56
Enbridge (ENB) $1600 5.91% $94.56
IGM Financial (IGM) $1600 6.16% $98.56
Russel Metals (RUS) $1600 7.07% $113.12

Over $2700 in dividends
With consistent dividend increases, after 5 years could expect to receive over $2700 in dividends just from these 5 companies. And the dividend amount could be even higher if you re-invest those dividends over the 5 years.

Make money while you sleep
Dividends are truly passive income, you don't have to work extra hours, or deal with employees, or manage real estate, or make sales. You literally earn dividends while you sleep.

22.4% return?
You might be thinking the dividends in this example don't seem like much, but holding stocks for the long-term will get you double-digit returns. For example I purchased TRP (in 2000) for $13.40 when it’s dividend was $0.80, today the dividend is $3 which makes my Dividend Yield on Cost:

$3 / $13.40 = 22.4%

My $2479 investment in TRP has returned over $5600 in dividends alone from this one stock, plus I receive 22.4% of $2479 (my initial investment) in dividends every year….if history is any indication this 22.4% will increase again next year.

There is power in dividend increases, the only way to take advantage of that power is to hold on to the stock.

Should you go buy these 5 companies?
Does this mean you should go out and buy the 5 stocks I mentioned above. No. Remember to buy quality stocks when they are priced low. I used these companies as examples and they might not be undervalued (priced low) by the time you read this. In addition to looking at a company's dividend yield, there are 11 other simple metrics to watch. I can help you to start investing today, why re-invent the wheel when you can learn from my 20-years of being in the stock market. I've witnessed first hand the ups and downs of the market, and I know what it's like to start investing your hard earned money. I created the 12 Rules of Simply Investing to help you get started right away, and start earning more passive income for yourself.

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