A portion of this video is sponsored by Wealthfront - Enjoy 2.55% Interest Within Their Cash Account Here: https://wealthfront.com/gpstephan - Lets talk passive income and how to earn up to $100 per day with Dividends - Add me on Instagram: GPStephan
GET YOUR FREE STOCK WORTH UP TO $1000 ON PUBLIC & READ MY THOUGHTS ON THE MARKET - USE CODE GRAHAM: http://www.public.com/graham
Trade Bitcoin, Doge, and other crypto with low fees on FTX. Use my referral code GRAHAM and get up to $100 FOR FREE: https://ftx.us/partners/graham
GET MY WEEKLY EMAIL MARKET RECAP NEWSLETTER: http://grahamstephan.com/newsletter
The YouTube Creator Academy:
Learn EXACTLY how to get your first 1000 subscribers on YouTube, rank videos on the front page of searches, grow your following, and turn that into another income source: https://the-real-estate-agent-academy.teachable.com/p/the-youtube-creator-academy/?product_id=1010756&coupon_code=100OFF - $100 OFF WITH CODE 100OFF
THE BASICS OF DIVIDENDS:
Anytime you buy a stock - that entitles you to a small portion of that companies profits…and, SOMETIMES, those profits are distributed to you on a regular basis in the form of a DIVIDEND.
THE GOOD:
ONE, you’re INSULATED from the stock market.
For the most part, you KNOW that you’ll get that VERY same dividend payment - in the exact same amount - regardless if your stock trades for $20 or $40…and, for someone who’s expecting consistent cashflow, this helps smooth out the fluctuations in the market.
Second, Dividend Payments have been LESS VOLATILE than Stock Prices.
For example, the Simply Safe Dividends blog found that - from 1900 through 2018 - dividend payments remained fairly constant, with an average variance of +/- 10% during market downturns.
Third, throughout Recessions - Dividend payments sometimes INCREASE.
As Simply Safe Dividends points out, “in three of the above recessions…dividends paid to investors actually increased, including a 46% jump during the first recession following WW Two.”
Fourth - Dividend stocks have been shown to provide a comparable return to the overall market.
Fidelity found that dividends accounted for 54% of market returns during times when inflation was above 5%.
THE BAD:
FIRST, Dividends are not guaranteed.
Even though companies generally try to avoid cutting or reducing dividend payments...this DOES happen, and because dividends are often a reflection of a company’s PROFITS - in the event of a downturn, they may chose to turn off the money-facet until conditions improve.
SECOND, Dividend payouts mean NOTHING when the company itself declines in value.
In this case…earning 5% annually might actually LOSE YOU MONEY when the STOCK ITSELF declines 30%. Now, SURE - there’s a chance the price recovers while you sit back and collect all that extra cashflow…but, there’s a chance this DOESN’T happen…and, that needs to be considered.
THIRD…Even though there CAN BE some Tax Advantages…there CAN ALSO be some disadvantages.
And FOURTH - Dividends might be flat out “irrelevant.”
Two well-known economists argued that a company’s dividend didn’t matter - AT ALL - because it has little to no effect on the price of a stock or its cost of capital.
My ENTIRE Camera and Recording Equipment:
https://www.amazon.com/shop/grahamstephan?listId=2TNWZ7RP1P1EB
For business or one-on-one real estate investing/real estate agent consulting inquiries, you can reach me at GrahamStephanBusiness @gmail.com
Graham Stephan receives cash compensation from Wealthfront Brokerage LLC ("Wealthfront") for sponsored advertising materials. Wealthfront only sponsors content that relates directly to Wealthfront and does not sponsor the entirety of this video. Any recommendations made are Graham Stephan’s own opinion and Wealthfront does not endorse, sponsor, or promote them. The paid testimonial provided above may not be representative of the experience of other cash account clients, and there is no guarantee that all cash account clients will have similar experiences. Checking features for the Cash Account are subject to identity verification by Green Dot Bank. Cash Account is offered by Wealthfront, a member of FINRA/SIPC. Neither Wealthfront nor any of its affiliates are a bank, and Cash Account is not a checking or savings account. Investment management and advisory services are provided by Wealthfront Advisers LLC, an SEC registered investment adviser.
*Some of the links and other products that appear on this video are from companies which Graham Stephan will earn an affiliate commission or referral bonus. Graham Stephan is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. This is not investment advice. Public Offer valid for U.S. residents 18+ and subject to account approval. There may be other fees associated with trading. See Public.com/disclosures/