hero section background image

Why would I invest in
dividend - paying stock?

That decision is all up to you. We are in no position to give you financial or investment advice nor do we want to. All we can do is offer you our own personal reasons for dividend investing:

Read More
alternative for savings account

While it is smart to have some money available to cover unexpected expenses, banks pay so little interest these days that we wanted to look around for alternatives.

alternative for savings account

We value our time and we're happy to update our portfolio just once per month as short term fluctuations in stock price are not that important to us. We just set some money aside each month to buy more dividend-paying stock.

alternative for savings account

Without the need to constantly monitor the stock market, we feel more relaxed. Even in these turbulent times with Covid-19 we can sleep well at night. Ideally we'd keep the stock in our portfolio for life.

dividend investing
dividend investing

Dividend investing is easy

We found it very easy to invest in dividend paying stock; just buy stock and watch dividends come in. How to find the right stock and manage your portfolio is a different matter altogether of course, since you do need some knowledge for that.

We started following a model portfolio from an expert, then we got more and more interested and knowledgeable to do more of the analysis ourselves and the more we learned, the more it grabbed us. It became an interesting hobby for us. We've been learning more and more about all types of investing ever since. But the ease was what got us interested in the first place.

monthly pay

Monthly Pay Rise

Sure if you don't have a lot of money and you are just getting started, the dividend-payments may feel like you're back at your first job delivering newspapers. But where else can you get a pay rise each month by simply buying more stock? Or by reinvesting your dividend payments in new stock and have it compound? For us it was difficult to save money for later in a boring pension fund. But actually seeing more money coming into your bank account each month was an enormous boost in motivation.

Suddenly it was fun to set aside money to invest in our future financial wellbeing and we even started to prefer it over buying the latest and greatest gadgets (that just end up in the back of a drawer after a couple of weeks of use anyway). Seeing our money work for us each month, actually made us value the money more and turn way less "cash into trash".

monthly pay
reduce risk
reduce risk

Passive Income for Pension or Insurance

A lot of people buy stock for capital gain, hoping their portfolio will be worth more when they retire and need it the most. But what happens if the market collapses just when you are about to retire? What if you are lucky and reach a high age in good health? Will the saved money be enough to cover you financially all those years?

For us, being independent software developers, we needed to take care of our pensions ourselves and we thought it would make much more sense to start building a passive income that would keep coming indefinitely. An income that we could leave to our children if we pass away and which could keep increasing as inflation decreases the value of the currency we hold. An income that will give us more security, not just in some far away future, but also today. If we get sick and are unable to work, the passive income will still come in. So there's less income-loss to insure. And as the passive income keeps growing, it could bring us full financial freedom and early retirement.

Aren't Stock Investments Risky?

As we are independent software developers, no work means no income. So if the economy tanks or if we have a health-crisis or an accident then no money comes in. Even if our passive income is not even close to cover our regular income, we'd rather build multiple income streams instead of depending on just one. Just imagine you get dividends from 30 different companies, so 30 different sources of income.

What would happen if one of those companies goes bankrupt? Sure, your income will be reduced, but you still have 29 other sources of income working for you. Even if you are unable to work, all those sources of income keep providing cashflow for you. To us, that makes things less risky.

But the Value of an Investments can be Cut in Half Overnight!

Yes, that's possible and it happened to us on some stocks as well. If a company lowers (or even halts) dividends, the stock value takes a plunge as well, hurting you doubly. Then again... pretty much everything we ever bought halved in value as soon as we walked out the store. If you buy a new car, it pretty much halves in value just driving of the dealerships' parking lot. A used pair of shoes is typically worth only a fraction of the price we just paid for them new. At least most stock we own actually increased its value over time and oftentimes increased dividends as well. So, to us, buying stock doesn't feel inherently more risky than buying anything else.

Even now, with a pandemic causing a lot of unemployment and bankruptcies in the world and initially making the stock prices drop severely, a steady income has been coming in from dividends.

We think it's very cool to be able to buy stock for say $1800, get paid a dividend each month for as long as we like and if we want to get rid of it, sell it for hopefully at least the original amount we put in. But sure, it could be worth less as well at the time you want to sell.

Again, this is how we feel about it. But we are not financial advisors and we will not advise you to put your hard-earned money into stock that, indeed, could wipe out your entire investment. And you should know better than to take investment advice from some random guys on the internet anyway. You really need to read up and get independent advice before you decide to get into dividend investing.

We have made our choice and DiviDragon was born as a result of that choice and if you ever decide to start dividend investing as well, we'd love to welcome you aboard.

stock investment