Short interview clip (Capitalism.com, Jan 10, 2017) in which Ryan Daniel Moran contrasts speculation vs income investing and states his method for choosing income-producing stocks: favor dividend-paying, blue-chip companies that have raised their dividend for at least 10 consecutive years (often called 'dividend aristocrats'), and target an initial dividend yield of about 3.5–4% that he expects to grow annually.
Questions this video answers
At least 10 years.
About 3.5% to 4% starting yield.
Dividend aristocrats.
Tom Zabro asks, what criteria do you follow for choosing income producing stocks?
So there are basically two approaches to investing. There is speculating, as I call it, which is hoping that things go up in value. That's flipping houses, that's trading options, that's investing in tech companies that make no money. And then there's the income investor, the person who buys real estate, having the renter pay for the mortgage and having some leftover. It's buying dividend producing stocks, it's buying or building businesses that make a profit. I am an income investor. It's my opinion that if you're trying to make money in the stock market, the only time you should be speculating, buying and selling, buy low, sell high, are the people who are doing that full time. If you like, you can have. If you're a house flipper, that's a business. If you are trading options or trading stocks, that's an income stream. Or it can be if you're a professional trader. Where I spend my efforts is making my money in business and putting the profits into other income streams, not other speculations. So the best place in my opinion, where I spend the most amount of my energy in terms of buying income producing stocks is dividend paying stocks. And my criteria there is very simple. I'm looking for companies that have increased their dividend for at least 10 years or more. Why? Because 10 years means the company has had highs, it's had lows, it's had sideways, probably it's had all of those in 10 years. And if they've raised their dividend every year, even through the hard times, good, bad, sideways, that's a good indicator that they're going to keep raising their dividend throughout the rest of the time that you hold the stock as well. So I'm looking for a stock that I can buy that's gonna give me at least a 3 1/2 to 4% return on my money starting right now. And that's gonna go up every year for the next 10 years plus. So no matter what happens to the stock, if the dividend keeps going up, then my returns are gonna keep compounding. So I make my money in business, I put it over into income producing assets. Some of that is dividends. And that's a great foundation for an income producing portfolio. But we're looking for something that's gonna be 4% starting now, and then next year it's gonna be four and a quarter, then four and a half, then five, then five, 25, five and a half and on and on and on. So what we're looking at is for the.
The amount of the dividend to have gone up every year for at least 10 years. And that's a quick Google search. You can type in stocks that have increased their dividend for at least 10 years. Dividend.com does a great job of organizing them and allowing you to search for different stocks. A lot of people call them dividend aristocrats. It's just blue chip companies that have increased their dividend for a long time and I'm yet to find an investing strategy that beats that formula. I'm just, I'm yet to find it. Unless you are Nostradamus of the stock market and you can pick the Netflixes of the world that go from $10 to $100 in a three year period for the average person. I'm yet to find a formula that outperforms the dividend aristocrat approach of just long term dividends that are going to go up over time. That's how I pick my income producing stocks. It.
