Passive Income Class #1: Dividend Paying Stock

Good morning, my friends. Good morning, people. Not yet my friends, but about to be my friends. Good to see you. Give me a shout in the comments if you can hear me, if you can see me, if you're watching live. Good morning, Alex. Good to see you. Hey, David. What's up? Victor. Good morning. Amanda Blades. Thanks for hanging out with me in the green room. Hey, Drew Hitchcock. First one here. Good work. Hey, buddy. Hey, Rhino. Hey, Matt. Hey, Choi. Hey, Brandon. Hey, Susan Anderson. What's up? Hey, Samantha. Hey, Errol. Good to see all of you. Hey, Mayor. Good to see you guys there. Everybody's pouring in. Good to see all of you. The world has gone crazy, so today we're gonna keep things even more rational than normal. Hey, Raul. Hey, Alec. Hey, Oana. Hey, Alicia. Hey, Audrey. Hey, Hunter. Hey, Paul. Hey, Raoul. Whoo. Coming in too fast. Hey. Today is the first part of our passive income series that we're doing here inside of the 1%. Hello to all of you who are watching on YouTube. Just so you know, 1% members, we are considering just kind of bringing these in house and keeping them in the community and not streaming them to public places. So. Love your feedback on that. But a post about that coming soon, I'd really like that feedback. Hey, Manny. Hey, Kenan. Hey, Mike. Hey, William. Hey, Salome. Hey, Herb. Hey, Justin. Hey, Randy. Let's do this. Hey, Paulina. All right, so we're going to talk about it. Seriously. If I could get one. If I. If I'm working with somebody and I'm never going to see them again, and they ask me, how do I build wealth over the long term if I could get them to do one thing? It's what we're going to talk about today. So this is really a life changer if. If you're open to it. And part of my skeptic, like, my hesitation is this stuff looks boring until you go under the hood. Like, it looks unsexy and it looks deadbeat and nobody talks about it. But when you'll open up the hood and you look at the numbers and you look under the. Under what's going on, it's real exciting. Like, really exciting. So my goal today is to introduce you to what I think is really the foundation of.

A passive income portfolio. And if you do only this one thing over the very long term, I have a feeling you'll thank me. So before we do that, I know the real reason you're here is because we do something as a crew that makes election counts go faster. It makes people become more rational. It makes the economy better and it brings people together and it's something that we call the simultaneous sip. So grab a cup or a mug, glass of chalice of Stein, a tanker to thermos and join me for this thing that we ripped off from Scott Adams. It's something called the simultaneous sip. Join me now. Go.

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Thank you, David. Appreciate that. No one else gave me a thumbs up. So, David, you're my favorite person today. Thank you, sir.

So.

I want to remind all of you.

If you remember from our previous classes, we have this course inside of the 1% called the millionaire class. The millionaire class is really the overview for building wealth and passive income. And what I'm doing in these calls is going a little bit deeper into each topic so that you can reference that course as you find things interesting or relevant to you. So I would recommend, remember you have that course in your members area for you to go through, but we're going to dive a little bit deeper into individual strategies on these lives. But that is there for you, for you to dive into. So in this class we're going to cover what I think is the foundation of the, of, of what your portfolio might look like and its dividend paying stock. All right, so.

Oh, oh, I forgot something. I forgot something. This is important. Required reading for the next six weeks. We are going to be going into a different passive income strategy every week. And sometime in the next four to six weeks we're going to be interviewing the author of this book and you should get a copy of it. It's called why Doctors don't Get Rich. It's by Tom Burns. He's been on the podcast a couple times. It is not made for doctors, but he's a doctor and he is like BFFs with Robert Kiyosaki, but put it to a practical guide because he was a high earner, right? He was a doctor making 150,000 a year but was caught in the rat race and kind of documents his passive income journey in this book. And we're gonna be interviewing him and referencing some of this. So go get this book, grab it on Amazon, get 20 bucks. Why doctors don't Get Rich by Tom Burns. One more time for those in the back. So go grab this, go grab a copy of this because we're going to be interviewing him in one of the classes for this series and you'll want to be familiar with his strategies and ideas so that we hop on a call with him. You can ask him whatever is relevant to you and your situation. So go get a copy of that. All right, now let's dive into.

Dividend paying stock. There we go. So first, my standard disclaimer. I'm an idiot who doesn't know what he's talking about. Don't listen to a thing I'm saying. Get help from somebody much smarter than me. I'm just some dude who is an entrepreneur and I've noticed that entrepreneurs have a different risk profile and they have a different risk tolerance and different desires about how they invest. So. So I'm talking to entrepreneurs like me. I'm so not qualified to talk about this. So don't listen to anything that I say. This is for entertainment purposes only. And let's dive in. All right, so if I could give you one thing to do over the next years, decades, if we never see each other again and you wanna build long term wealth and passive income, I would give them this. And I mean this for.

People on my team, I mean this for people in our community. I mean this for my friends. When people are like, what's one thing I do? I buy dividend paying stock. Exactly. What we're gonna be talking about today is what I would give the one, like one thing to somebody. I'm actually working on something that my team doesn't know about.

I'm outlining, like, how do I put every member of my team on a path to eventually become a millionaire? And I keep coming back to this like, this is what I'm gonna have to help them understand. This is the piece. This is the piece that if I can get them to do this.

This will radically change their life. So with that in mind, let's go over why we do this. Why dividends? First reason, there's no stock picking. There's no predicting what the economy is doing. There's no posturing, there's no betting, there's no guessing. You don't have to be an expert. You don't have to even really be good at this. You don't have to be constantly checking your portfolio. You don't have to constantly be checking what the market is doing. It is a very simple process.

Where you do not need to be A whiz bang stock picker to do extremely well with this. All right, so that's reason number one. Reason number two is this thing called double compound interest. Double compound interest simply means that there are a couple of things in this strategy that compound, you know, the idea of compound interest, of things accelerating over time. But dividend paying stocks have two forms of them. So there's a double compound effect, which means that over time things accelerate and get pretty sexy.

Now why not dividends? What are the downsides? Why don't people talk about them? Why do we not understand them more frequently or more often or more thoroughly? Two reasons. Number one, dividends are boring. They're predictable. They're not there. You never see top of Yahoo News that @&T raised its dividend $0.06.

There's nothing to talk about. It's boring. You don't see that Coca Cola, you might see that Coca Cola got banned in California and the stock goes down. What you don't see is that Coca Cola still raises its dividend $0.05. Why would you care? There's nothing to talk about. It's boring, it's predictable. So it's not sexy. The second reason why not dividends is because they tend to be old businesses. Established businesses that have been around for a long time have, have, are out of their growth curve. They're not Zoom or Netflix. They're no longer on this exponential growth curve in terms of the, the share price of the stock. So you're, you're not going to, it's not going to have an aggressive growth plan, at least in the short term. They, so they're, they tend to be old, established businesses that might not go up in value with the rest of the market. So you're not, you're almost never going to see an example like Netflix which goes from $55 to $1,000 a share. You're almost never going to see that when it comes to dividend paying stock. You're also almost never going to see a stock go from $55 to zero. I do know of one example in which that happened and it was Blockbuster. So Blockbuster got put out of business and they would have met this criteria. So that would have been a bad pick. They were a great dividend stock for a very long time. So the risk with dividends is you're working with old established businesses that have been around for a long time. They could potentially be disrupted in the marketplace, but they've also been around for 50 years and, and tend to have a track record of growing over time. So once again, this is just kind of like boring. You're not buying Tesla, you're not buying, you're not buying the new whiz bank thing, which means there tends to be lower risk. Not always, but there tends to be lower risk and they don't accelerate up in value as quickly. So now that I have unsold that properly, now that I have properly framed this to scare you away from it, I'll say this. I'm yet to find a better investment over the very, very long term asterisk. I'm only 33, so what do I know about long term? Right. But I'm yet to find anything that over time beats dividend paying stock. I have gotten in debates with financial planners, I've gotten in debates with other people who study this. But, but when you run the numbers.

It'S hard to find a flaw. All right, so here's the strategy in one slide.

The big idea is this.

The big idea is that we're going to seek to acquire dividend paying stocks that increase their dividend over time so that it compounds over time. So the example on the screen is if it pays a 5% dividend in year one.

And it's increasing 10% per year, then year two it's 5.5%. If it's year three, it's 6.05%. Year four, it's 6.6%. Year five five it's 7.3% on your original money. You know, if I were to be really accurate here, what this would read is more like this. It would actually read instead of percents, $2, then 2.2 dollars, then 2.42 dollars and now 25. So 20, this is 290 about. And then this ends up being.

No, I got something wrong in here. 275. That's what this is. This is 267 and.

Then $3 we'll call it. Alright, so if I were to be really accurate, what it's doing is raising the nominal amount of the dividend every year, but on a percentage basis that's going up, that's going up over time. So now once again, if you see that a stock raises dividend from $2 to $3 over five years.

Well that's not very exciting until you see it on a percentage basis.

And then it's really exciting. So that's the first part. We're going to seek to acquire dividend paying stock that increase their dividend over time so that that compounds. And number two, we're seeking to reinvest those dividends to buy more and more stock so that our passive income compounds over time. Or what that should really say is so that the amount of stock that we own compounds over time. So the dividend amount is going up and the amount of stock shares that we own is going up and that's a double compound interest. Does that make sense? Give me a, give me a yay in the chat box if this makes sense. Give me a nay if it does not and I'll explain it more. But because the, because the increase is going, because the amount we're getting paid is going up, and because we're reinvesting it to buy more shares, it means that we've got two forms of passive income. We've got two forms of compound interest. Higher, higher cash flow coming in, more stock coming in. Those two things together create double compound interest, and they work together. Okay, good. Thank you for your comments. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you.

So that is the double compound interest period piece of this. Now, there's a few rules that we're going to look for. Rule number one, we only buy stocks that have raised their dividend every year for the past 10 years or more.

So every year for the last 10 years or more, we're looking for stocks that have proven that over a long time they're going to keep raising their dividend.

Rule number two, we only buy stocks that have at least a 3.5 to 4% dividend the first year. Why? Because that's enough of a return for us to indicate, okay, like this is good enough to start. Compound interest builds over time. But we need to be, we need to have a decent foundation to start with. And that decent foundation for us is going to be starting at three and a half to four percent per year.

Year one. That is year one. So when we first buy a stock, we want it to be paying 3.5 to 4%. Now, we can get that on almost any stock if we do the next rule well, which is we only buy stocks on bad news because that's when they fall into buy territory. So.

There'S a couple examples I'll go through. But the.

Trend of things is that once a year, maybe every three years, just about every stock has some bad news come out that crater at stock price.

That's when we buy. That's what, that's our entry signal. And we have indicators of when to go in. And that indicator is when the dividend is three and a half to four percent.

So an example that I'll just riff with you. Procter and Gamble, most boring stock in the entire world. Because they sell, like, you know, Scotch tape and RXBARs. No, that's Kellogg's. Kellogg's is actually a good one, too, but, you know, they're just a boring company that owns everything and they sell everything. Procter and Gamble. Procter and Gamble tends to go up a little bit every year.

And then, like every three to five years, there's.

And that's when you buy. And then it comes back up over three to five years. Boom. There's one event, and Procter and Gamble, you could look it up, pays maybe a 2.5% dividend. But on those boom days, and it crosses in that 3 to 5 to 4% territory, that's our sign. That's when we scoop that one up. So that's rule number three. We only buy on bad news. And we can be confident that the news is temporary because this stock has raised its dividend, has enough profits over the last 10 years to keep raising its dividend. So all these rules together create.

Our criteria. And now, number four, we only buy stocks with existing profits so that we know that they will continue to pay the dividend over time. An example. Oil companies right now are unbelievably sexy right now. But because of the last year, they've lost money. They have not made money in the last year. They've lost money. Exxon Mobil lost $0.70 per share last quarter. So we don't buy right now. Now, if that company becomes profitable again, which it probably will, then we would consider buying, but only then. We don't buy stocks when they're not paying, when they don't have profits, because that's threatening our dividend. That's threatening the ship.

So we wait until it's profitable again, and then we can go back in. Then we can. Then we can buy more.

A quick example of this Caterpillar stock. Super profitable in the early 2000s. I owned a lot of it. And then one year, they didn't have profits. They lost money. So I sold all my stock. They didn't raise their dividend. I'm like, oh, that's a bad sign. I'm out. That was probably a mistake because they got back on track and they grew through it and they started raising their dividend again. But in retrospect, I just shouldn't have bought more, right? You don't want to buy more when they're not profitable. But it's okay to hold stocks if you've got them. Like I have some ExxonMobil, I have some oil companies. I'm not selling them, but I'm not buying more right now. Even though that dividend is super sexy, I don't want to buy a company that's not profitable. So we wait for it to be profitable again and then we go back in. Alright, so those are our rules. Does this make sense? Monica asks when was the last time they dropped? Every stock goes through waves and you can count on every three to five years or so it having a major dip. Now you have to understand.

That'S not sexy. Again, like I'm gonna tell you, hey, buy Caterpillar stock, but not for two years. That might be the best advice I ever give you.

But it doesn't make you excited now.

So the trick here is for us to have a list of stocks that we're paying attention to. And not every day, not every week, but maybe every month we might check in and see what's going on.

By the way, there's a lot of questions in the chat box like what do I think about these stocks? I'm not going to go through my opinion of a bunch of different sectors. I'm just not going to do that. I want you to get the strategy today and I'll go through some of the examples that I am personally tracking.

So I'm not, we're not going to give my opinion on every sector, on every little thing. This, this is what you need to know right now. All right, so there's a question about when, when is it a good time to buy? When it crosses 3.5 to 4% yield.

So look at these rules again. Rules. We only buy stocks that raise their dividend every year. We only buy stocks that have crossed 3.5% to 4% dividend. We buy stocks on bad news because that's when their dividend yield is sexy enough. And we only buy stocks with existing profits.

Alright, now here's an example.

Target, this is just a great classic example. Target has raised its dividend every year for 49 years.

Not always a lot, sometimes just a little bit. But every year it raises its dividend for the last 49 years.

Now hold on, wait, let me add something. It. Whoa, no. In November 2017, Target was trading near $80 with a, with a dividend of $2.25. So that was about a 2.8, 2.9% dividend. That's 2.2.9 divided by $80. Or sorry, 2.25 divided by $80 is like 2.9%.

Now the next quarter. The next quarter, Amazon announced that it was buying Whole Foods. And every retail company in the world crumbled.

And Target came down to between 50 and $55 a share.

So bad news for the company stock comes way down. But the kicker is, just because the paper value of the stock comes down does not mean the dividend changes. The dividend was still $2.25 per share. So what does that mean for the percentage of your return? If you were to buy stocks now, it goes way up. So now it's a 4.1% return on your money.

Now that still might not light the world on fire, but fast forward two more years and today Target trades near $160 a share. That's a 3x return on your money, which is amazing. But you would now be getting a 5% return cash flow on your money because why? Two reasons. The dividend continues to raise and because you reinvested those dividends to buy more shares. So now you're getting over a 5% return on your money in cash flow. But the stock has gone up three times.

Does that make sense? Do you get that? So now you've won twice. You've won twice because you've got the cash flow of 5%. And you've won the second time because you tripled your money with the paper value of the stock.

Now I'm going to show you something that I'm going to do live.

Because you won't believe me if I just tell you.

Now, the point that I want you to get from all of this is the returns might look really boring at the beginning. 5% dividend, who cares? But they get real sexy over time. So I am going to.

Run some numbers in front of you. And as we run this, this might be hard to believe.

So I'm just going to show you live. Alright? So come take a look.

At this little handy tool right here.

There we go. And there we go. So this little handy tool is a dividend calculator. So this will simply calculate what it's going to be over time. Now, I know this is going to be a little bit hard to see for you. I wonder if I can. Does that help? Yeah. Okay, cool. So.

What I'm gonna put in here is $10,000 for our starting amount. No contributions over time. We're just gonna do $10,000 one time. It'll just keep things real, real simple. Let's pretend the stock price is $25 and the stock price. Actually, let's bump this up. Let's say let's say the Stock goes up 9% because historically, if you ask a financial planner how much is the stock market going up, they're going to say on average 9% a year. And you keep that in for 20 years.

So this is a long term investment. And the stock is paying a 6% dividend. In fact, let's bump this down just to be a little bit more conservative.

So a 5% yield, but it goes up 10% per year.

So pretty simple. This is a pretty standard example. $25 stock, 5% yield, but it's going to go up 10% per year for 20 years. Let's take a look at these numbers.

All right, so calculation of this calculator says let's take a look at year one just so you can kind of get a grip on this $10,000 starting balance, 400 shares. At $25 a share, it goes up 9%. So $900, $500 in cash flow and dividends. But we reinvested that, we bought more stocks. And so after one year, our $10,000 is now worth $11,400. Pretty standard. Now take a look at this.

As we go through. Remember, our dividends are going up 10% per year plus whatever. We've reinvested that double compound interest. So this column here is cash flow. This is our cash flow. Ten years in, our $10,000 investment is now producing a 16, almost a $1700 per year in passive income, which is 17%, 17% on our original money. And the stock continues to grow and we continue to buy more shares. So as we continue to go at the end of 20 years, our $10,000 is now producing $7,000 a year. So a 70% return on cash flow. And our total portfolio here from this $10,000 investment is $142,900 from a $10,000 investment.

So do you see where this is going in terms of what happens when you have that double compound interest starting to grow?

This starts off real slow, but that engine gets real sexy over time. Now watch what happens if we add 10 more years. If you are. If you're 45 or under.

And we're talking about retirement here.

If we just Change this to 30 years, our. Come on. Oh, heh heh. I changed the wrong column. $25, 30 years, zero contributions, just your original 10 grand. Thirty years later.

That $10,000 contribution is now $30,000 a year in cash flow.

And that $10,000 has become $575,000.

Are you starting to see where you could be? Oh, I didn't show you my screen. Ah.

So 30 years, $30,000 a year in cash flow. $575,000 in total portfolio value from a $10,000 investment.

Now is it going to be this predictable? Probably not. But this is what happens when you have that double compound interest. Now here's the part. This is where you won't believe me.

So tune in, guys.

Just. I'm going to show you something and you're going to have a hard time believing this.

So pay attention to what I do here.

Now, all I'm going to do is I'm going to take the expected increase of this stock.

To 00. So what we're doing here is saying, all right, we're going to buy a dividend paying stock that pays us 5% interest.

But the stock never goes up in value. It just stays $25 forever. What happens if that's the case?

So the stock never grows, it just pays a dividend. We calculate this return.

Let's check this out. The growth is now.000 all the way down. Our dividends, however.

$10,000 a year is now a million dollars.

And our total portfolio value is $2.7 million.

How the F is that possible.

That if the stock doesn't go up, the portfolio is worth more?

How the f is that possible? Is your brain playing tricks on you right now? Well, we're just calculating is that if the stock price doesn't change.

You make more money than if it goes up.

How is that. How is it that if the stock doesn't go up in price that your income goes from zero to a million dollars a year? How is that possible?

Makes no sense right.

Now. Two things to know here. One, this is a fantasy example that doesn't exist in the real world. So is it always going to be like this? No, of course not. Is it always going to be this straightforward? Absolutely not. It never is going to be like this. However, what I want you to get out of seeing that is.

All of you talking about what about taxes and what about inflation?

How is it if you just sit on it.

You can't change that, folks.

Now what the hell did we just see here?

Well, what you saw was that the stock price never grew. So your dividends were buying more and more and more and more and more. Your dividends were being reinvested to get more shares of the stock that was producing this dividend. And so in this fantasy example that doesn't exist in the real world, you make more money if the stock doesn't go up. In price.

So everyone who is talking about, well, the stock went from this price to this price, they could be missing the whole game. They could be missing the whole thing. If the game is cash flow, if the game is predictability, the people who are trying to bet on it going from one price to another are missing out.

So this is why it's so important. You take the drama out of this, you take the stock picking out of this, you take the stock predictions out of this, you take the economy out of this.

And now you're in a position where you really have much more control your financial future.

Even if it doesn't seem sexy at first, it compounds into crazy numbers over the long term.

Okay, so you guys good to keep going or do your brains hurt? Do you need a break here or are you guys good?

What we're gonna do next is go through.

A couple of examples.

There it is. Manny. Got it. When a stock drops, you're buying more on sale, hence the portfolio. Yes, you got it, Manny. You absolutely got it. So it is not about.

Predicting what's going to happen. It's about buying the cash flow on sale. So I heard it once put, if you own geese that lay golden eggs.

And the goose is laying golden eggs consistently, you want to own as many geese as possible, right? What happens if the price of geese goes down? Are you like, ooh, I can't sell my geese for the same amount? Or are you like, give me more of those geese. I want to buy more. Give me more.

Of course. Of course you want to buy. You want. The game is the golden eggs. You want as many golden eggs as possible.

Manny. Got it. All right. Justin's brain hurts.

So maybe some examples will help.

Let me move my screen back.

So let's go through some examples that I think will help.

Now, you can follow along. You can just use your fancy Google machine.

To follow along. Here are some examples that I'm watching right now that I like. And.

We can pull these up individually. In fact, if you want to write these down real quick, I'm going to stop sharing these in a second so I can show you the actual chart of this, and we'll go through these examples. So I'm going to give you eight seconds to write these down. Seven, six, five, four, three, two, one. Okay, so we are going to go through these examples one by one so that you really get this.

And of course, that was stupid of me. Wrong button.

So.

Standby, standing by. Okay, now, what you should see on my screen right.

Now.

Is the stock. Unum. Unum. Is an insurance company. They actually own other insurance companies. So if you're familiar with Colonial Pen.

Those ads that are on the Price is Right, they own Colonial Penn. So this is an insurance company, been around for a long time. Trading at $18.

Here's your dividend right here. 6.15%.

Now, if we look at this over five years.

Here'S really bad news. This is coronavirus.

$10.56. Now, when is it a better time to buy UNAM at the peak of bad news or once things have recovered? Obviously, it's a peak of bad news. So that dividend, what was that dividend at $10 a share, it's 10%.

That's real good to get 10% on your money. Year one.

Now, here's the rub.

Here's the rub.

If we look at.

A longer time horizon.

And we look at, okay, 10 years ago.

10 years ago, this stock was trading between 19 and $22.

So most people would say, I've lost money in the last 10 years, and it's only trading at $19 now. What a waste of my money.

To have had my capital tied up for 10 years in this business.

Now, I get that. This is a. This is. That's a terrible return.

Here's the kicker. Get this tune in.

Remember our rules.

Our rules of only buying stocks that have raised their dividend and that we're paying at least a 3.5% to 4% yield. This stock would not have factored in. This stock would not have met our rules 10 years ago.

Because 10 years ago, it had a lower dividend and a higher stock price.

So we wouldn't have bought it 10 years ago. It wouldn't have met the rules.

Today, it meets the rules.

So if you look just historically and say, like, ugh, don't want to buy this stock because it used to be worth more. The question is really looking at the rules, buying when it fits the rules. So if we look back at the example of Target.

Target is tgt.

So if we look at Target over the last. This is 50 years.

Actually. Let's just do five years here. This is five years.

Over here, when it's trading at $80. Doesn't meet our rules. We don't buy Target. It dips to here to $50. Now it meets our rules. We buy, climbs back up to $88. It doesn't meet our rules anymore. Now it's too expensive because we're not getting that 4% yield. Now it drops here to 61. It probably meets our rules.

Comes back up here to $129. Does not meet our rules. We don't buy more. Drops back down here in coronavirus to $92 a share. May or may not meet our rules. Not sure. Today we are not buying more. Target does not meet our rules. It's only paying a 1.7% dividend. Now, the time to buy this was when there was bad news. Here, here, and here. That's when it meets our rules. So if we only buy on our rules, we avoid, for the most part.

The big crashes that people fear. You with me? You got this. How's your brain right now?

Scott asks, do I disregard UNAM because they cut their dividend back in 2003, 2004? No. I look for 10 years. 10 years of growth. So have they raised their dividend every year for 10 years? Because that's my signal. And again, are they profitable?

Now let's go through another example.

Bank of the Ozarks. This is a commercial bank. They lend on a lot of construction.

So bank of the ozarks, trading at $25.00, pays a 4.35% dividend. Right? Now, look, over five years.

This is the max.

Back here. Doesn't meet our rules. Doesn't meet our rules. Doesn't meet our rules. Now back starting in 2018, it meets our rules.

Now, we've been in a buy territory for bank of the Ozarks from, from end of 2018 to now. We it meets our criteria to buy. Buy. Buy. Buy. Buy. Buy. Buy. Buy. Buy. Now, we're banking on two things. We're banking on this company being profitable enough to continue raising its dividend.

And we're banking on this stock staying profitable and in business.

Question from Randy. Are the dividend amounts static? No, the dividend amounts raise every year.

They raise. That's the stocks. That's the stocks we're going for. Stocks have raised their dividend every year.

Do I look at financial statements to see if they're profitable? You can, and that's an easy Google, but I'm just looking at earnings per share. Earnings per share is the only real thing I'm looking at. Does the stock have earnings per share and have the earnings per share stayed consistent? So that's an easy Google. On any stock, you can look up the earnings per share and see if they're, if they've stayed steady or gone up. So are there profits in the business on a consistent basis?

This is an interesting comment. Banks are high risk because many will disappear. You can say that about any industry.

You can say it about anything. Everything is always about to disappear.

The question is, can that company adjust?

AOL didn't adjust. Yahoo kind of adjusted. Yahoo still around. Yahoo still buys companies.

AT&T adjusted. And they're going to have to keep adjusting because they're being disrupted, too. But they're buying other networks, they're buying other businesses. They're planning ahead. So let's use that as our example. Our next example, target or AT&T trades under T.

So AT&T.

Trading at $27.

Dividend yield 7.5%.

That's pretty sexy. Now, over five years, again, look at this.

Now, over the very long term, AT&T has grown, grown, grown. Not at a torrid rate.

But we're in buy territory now. We were not in buy territory in January of this year. Well, we might have been, depending on what the dividend yield was here.

Back here In July of 2016, you know, we're at $40. We might not be buying this on these dips, we're buying and adding our cash flow. Now, remember, folks, remember, gosh, such an important point.

Tune in, everybody. Hashtag listen. On those dips, your dividends continue to buy more shares. So if you own AT&T and it's paying us, it's paying a $5 per share dividend, or that's way too high. They're paying a $2 per share dividend. That $2 is buying more stock. So if it dips, your dividend is buying more stock, your cash flow is going up.

Get it? If you hold, you're buying more shares, you're getting more. The compounding interest continues to go and go and go and go and go and go. All right, this is exciting. This is exciting. All right, so.

Let'S look. Let's look at one more example. This. Let me show you like a classic example, because what I'm showing you right now, just the stocks I'm tracking right now, let me show you one that I'm tracking. Actually, there's two on here that are just very classic examples. Like, this is the kind of predictable, boring stuff you want.

Take a look at Verizon. Verizon trades at V under vz. So Verizon is selling for or is trading at about $59 a share.

Their dividend is 4.25% right in our wheelhouse, right above that 4% buy signal. Now, check this out. Over five years, Verizon has gone from $45 to $59. Now, those returns are not going to set the world on fire. They are not going to turn any analysts Heads. They are not going to get a lot of news from Jim Cramer. They are not going to excite Wall Street. You're not going to hear about them around the kitchen table while people are talking about Ethereum and Bitcoin. You're not going to get that 10x return going from $40 to $60 over 5 years. Yeah, it's a 50% return over 5 years. It's good.

You're not going to hear people talk about it. You're not going to hear that talked about. But it was more than that. It was more than that, because.

If you bought it back here at $45 a share and it was paying a 4 or 5% dividend, that dividend's going up every year over these five years and you're buying more shares. So if you owned 100 shares here, you own 120 or 125 shares here, and all of that has gone up in price and you're continuing to get more dividends. This. So. So what people would say is, oh, it's a 10% return over five years. That's not that great. No, it's more than that because you were getting dividends of 4 to 5% and you were buying more dividends every year. So that 10% return is more like 18% per year.

You see why that's exciting? You see how. You see why there's reason to be pumped about that.

Now, hang on, there's someone at my door. Let me check the ring doorbell. Who is knocking on my door right now?

Standby. This is fun.

Oh, it's a handyman. I'll be right back. I'll be right back. Don't go anywhere.

Good morning. How are you?

All right, thank you, sir.

And we're back. Hi, guys. Good to see you.

That's funny. Bitcoin. 15K.

I think.

I don't know what I think about cryptocurrency, but I do know what I think about stocks. So I invest in things that I know. I invest in things that I know.

So.

Verizon, you might say, on the surface, doesn't have that great of a return, but it's much more than the stock value price, because you're getting that dividend every year and it's going up over time. You're buying more and more and more and more and more. And then the last example that I want to show you, and then I'm going to give you an assignment.

Nick, you made me laugh. Nick. Nick.

Nick. Do we have ink on paper? Can we make an announcement yet? Because I really want to make an announcement. When we can make an announcement. Let's, let's wait. We'll wait a couple weeks until we can make announcement. But I'm very excited for our. For our announcement. Nick and I are having a baby. All right. ABV.

Love this guy. I love me some AbbVie. Oh, oh, oh. I love me some Abbvie. Abbvie is a pharmaceutical company around for a long time, if you are familiar with. So the most profitable.

I am not making the announcement.

The most profitable drug in the world is called Humira. Abbvie owns Humira. Now, they own other drugs too. So they're. But they've been around for a very long time. And.

Humira is like, it's their cash cow. So that you might see it next time you watch tv, you'll see an ad for Humira. And.

I'm a kind of a natural guy. Like, my green smoothie this morning was full of superfoods and stuff. But every time I see that, I'm like, yeah, Humira.

Get it? Get Humira.

Everybody should take Humira. Not really. I'm not a doctor. Don't take my advice. I'm just an investor in AbbVie.

So Humira is one of the drugs owned by Abvi and. Oh, I'm so funny. I'm such a dad. All right, so AbbVie trades at $93 a share, has a five and a half percent dividend. That's great. Like that is. That is a very healthy, sexy return. Now, if we look at it over the last five years, we can see there's been several opportunities for us to buy. So when it dipped here into like a year ago at $65, what was this dividend percentage higher than 5%? You know, we're looking at like an 8% dividend. Even here during COVID Peak of COVID it dropped down to $68 a share. These are our buy signals. It's still in buy territory right now. But when it dipped down to 65, $68 a share earlier this year, how pumped are you to buy this stock, which is probably paying a 7.5 or an 8% dividend? You're thrilled, you're absolutely thrilled to buy on this dip. And then when it recovers, you know, we're looking at. Now you've got a 50% return in the first year because it recovered, but your div end is still locked in at that 8 and a half ish percent return. And you're buying more stock the whole way. So I love Me some Abbvie.

One more example came to my mind. And now. Oh, oh, oh, oh, oh, oh, oh. Yeah, I got one more. One more. Is this good? Are you guys still with me? Give me some shouts in the comments. You've slowed down. Have I lost you? Do your brain's hurt. Give me the good stuff.

Let me know if I'm here. All right? Okay. So I understand.

Irfan. It's Irfan, right? You're gonna do one of these as soon as I explain this to you. And I understand why this is confusing, but you're gonna do this as soon as I explain this. Okay? Hi, Krista. So let's pull out a handy dandy calculator here. This is third grade math. Third grade math. Oh, you can't see that. So let me pull it up on Google.

Google calculator.

So let's calculate this together.

You are gonna slap your head so hard.

Where's my. Oh, I'm coming. Alright. Hello, Google calculator. So if a stock is paying.

I'm gonna make you guys sick with all these screen changes. I know. If a stock is paying a two and a quarter.

Two point, that. That's their yearly dividend. $2.25.

Let's just make it easy. They're paying $2 a share in a dividend and the stock trades at $80. What is that return? Two and a half percent.

Are you with me, Irfan?

It's. You see that? Very simple second grade math.

Now that same $2. Ah, get out of here. That same $2 if the stock drops to $50 is now 4%. It's the same $2. It's just the cost of the goose. It's still $2. Golden eggs. But the price of the goal of the. Of the goose has gone down.

That's. That's why the dividend yield goes up when the price goes down. All right. Irfan gets it. He gets it.

Now I wanted to show you one more example.

Gpc.

Gpc. Genuine Parts Company. The most boring stock in the whole wide world until you look up their company history, which actually has a cool story behind it. But. Okay, I'm trying to keep up with your comments, Randy. How often does that $2 change? Every year. Because it goes up every year. We're looking for stocks that increase their dividends every single year. How often does it change every year? And it only goes up. If it doesn't go up, we don't buy it.

So.

Gpc. This was during COVID Look, I don't make stock recommendations. I do not make stock recommendations. But I told the 1% members and Covid, I was like, everybody might want to Google gpc.

You just, you just, you just want. You just might want to Google it. Just look it up, see if you like it. See if it fits in your portfolio. Here's why.

GPC.

Outside of our buy territory. See this? But it was on my watch list. 3.24% yield. I am not buying GPC right now. Dividend is too low. It's too low.

But take a look at. During COVID.

Boom.

Dropped in half.

It dropped in half.

So what does that do to this yield? It doubles it, right?

So now it's paying six and a half.

And it recovered.

So you would have doubled your money and you'd still have locked in a six and a half percent dividend. That would be buying more shares and growing over time. And you can hold that sucker for a very long time.

Here's. Here's another one that. Here's one that you all might just recognize. It'll be fun because you recognize it.

3M.

The glue company.

Again, the most boring company in the world.

Glue and tape.

Glue and tape. That's what 3M sells.

So they're trading at 3.6%. So like just in our range. Like, you might maybe consider it at this price. It's like just high enough to be like, maybe. But look during COVID.

Boom 117.

So the stock was on a 30% discount.

So this is now 4.5% or 5% yield. It's now recovered. But we've locked in that dividend over five years. We've had a couple opportunities to buy.

So we would not have bought anywhere in here. So from 2017 to 2019, we are not buying 3M.

Covid will buy it. So now we got an entry point on this. We might have bought it back here in 2016 when it dipped. This whole period here. We are not buying more. We are not buying more.

So some of you are asking how often does this happen? Only like once a year or so does one does something on your hot list. Enter in buy territory. That's when you buy it.

So 3M has been a high performer ever since. For the last 10 years, 3M has really performed well. And we were not buying more stock except in a couple key areas. And that's really what we're looking for. We're looking for stocks. One more example, because I'm having fun. This is Procter and Gamble.

When I recorded the. When I recorded the millionaire class, which is in your members Area.

Proctor and Gamble was the example we were watching that we were looking at because Procter and Gamble got crushed while we were recording the class. And it was like, guys, this is just such a good example. It happened while we're all together. It happened. So Procter and Gamble had a big drop a couple years ago. So if we see here, Procter and Gamble, 2.2% yield. We are not buying this right now. It's too expensive. We are not buying this does not have a buy signal. But look, over five years, there was this right here. Nope, that's Covid. Right here. Right here. This is where.

This is where it cratered. So 2018, trading at $90 and then it fell to $72. 73.

That was our entry point. That was our entry point when we were recording the class. Actually might have been. How long is that we record that class. Well, anyway, if we just look at Proctor and Gamble over time, look at these entry points. So 2007, we're not buying Proctor and Gamble. Boom, it falls. We might want to buy it here. Look at this is 2015, $90 falls to 68. We want to buy it. 2017, set back at $90. Don't want to buy it. We want to wait till it to fall here. So Procter and Gamble had this period where about once a year, once every two, actually, it's like once every two and a half years. It goes through some period of. It's now exciting to buy. Covid was another one. It was at 120 before fell to 1. Looks like 114, 110. That was our buy time. We're not buying it right now. So this is the important thing is for us to keep that portfolio that we're watching and wait for the bad news. So let me go over, let me give you your assignment and then we can take questions if you've got them. So your assignment for this class right now.

Is this.

Google Dividend Aristocrats. That's it. Just Google it and make a watch list for companies that you recognize. Just look for companies that are like, oh, yeah, I know what they do. I'm familiar with them. Because there's going to be dozens of stocks. Verizon's on there, Target's on there. Coke is on there. AT&T is on there. Some of the ones we, you know, the ones we looked at are there. So just look for dividend Aristocrats that have raised their dividend for the last 10 years and just make a list. Just keep a list in your journal or on A file on your computer and that's it. Just keep that list.

We also, if you want some help, your most recent copy of the 1% newsletter. We made a list of some of them that are interesting to me. Right. I'm just like, looking at these stocks. You can start there if you want. If you want to collaborate on this, post in the Facebook group. Find, like, post what you discover, post what you research about these companies, and you can post what you're seeing, and we can all look at them and review them together. And then we wait for bad news. That's it. You keep your list, you refine it over time, and you wait for bad news. And that's what we're going to do together. So if I could get you to do anything to change your financial future, it's this. So go do this. All right, look, we are way, way over time.

So what I would like to do is if you've got a, if you're in the green room and you've just got like a burning ass question, your ass is burning.

Go ahead and wave at me. Like, wave at me. I'll take you off mute and we'll do this.

Like, Alex, David.

Jean Marc, Amanda, Victor, if your ass is burning, just wave at me.

Nobody's ass is burning. So if anybody has an itchy ass. Itchy. I'll now take itchy asses.

Nobody's. Nobody's ass is itchy. If anybody's ass is running. Just a little bit of leakage. Little bit of leakage going on.

Still nobody. Everybody's laughing. I don't know what everybody's laughing about. I'm just trying to help people. Just trying to help. It's not leaking. If it's just a little sore. You've been sitting too long. All right, if any of you just want to come up live, wave at me. I will do this.

I think I scared everybody with my obsession of talking about asses. Ass, a dividend paying stock.

Thank you, Kirtan. Thank you, Alex, for being in the green room. Thank you, David. Thank you, Victor, for being in the green room. Thank you, Jean Marc. Thank you, Alex. Thank you, Mario. Thank you, Amanda, for being in the green room.

Thank you, Tiffany's four year old, for laughing at my dad jokes. I'm glad you guys found this valuable. Like, I need to point something out. This stuff has been in your members area for the whole time you've been a member. You've just missed it. So this is why we're kind of recovering some of this to encourage you to Go through that class. It's not a long class, but it's going to cover this and a bunch of other passive income strategies that you can use. And we're going to continue to go through some of them throughout these live classes on Thursday. Now, next week. Next week is so important. It's also going to. It's going to do one of two things. It's either going to excite you or it's going to hurt your brain. It's probably going to be 5050 down, down the road.

Next. Next week we're going to talk about kind of a very little known strategy that you can actually boost the cash flow on stocks. So if you're getting a 5% dividend, you can actually boost it to 9, 10, 11%. That sounds super weird, but there's a way. There's a way to do it. And we're going to talk about it next week. We're going to talk about how you can take this portfolio of stocks that are maybe only making 5% per year and then flip a switch and have it actually double your cash flows. I know that sounds scammy. It sounds weird. It sounds overhyped. It sounds like. What the h are you talking about?

Victor is laughing at me. No, I can. You will get it when you see it and it'll be like, why does nobody talk about this? Why is nobody. So we're going to talk about that next week as the topic to follow up on this. Because you really only want to do this strategy on the stocks that you want to own for a long time. You don't want to do it on speculative stocks. Right. It could get you in trouble if you're doing it. Ah, it's, it's hard to lose when you do that strategy. But it just, it works better if you're going to own the stock for a long time. So we're going to. So I wanted you to see the foundation of the kind of stocks we prefer. And then we're going to boost the cash flows next week. Cool. All right, guys, this is fun. This is my favorite topic to talk about because entrepreneurs tend not to know this stuff. We get so focused on building businesses and building profits that we never talk about keeping and growing our profits. But the thing is, what you really want is freedom for you to do the things that you want. And it's the long term wealth and cash flow that is going to set you free to be able to build the types of businesses that, that you want instead of the business that you feel like you have to run because you're stressed about money. So if we dial in this piece, it sets your brain free to go build great companies and get really rich and change the world. So that's why this is so important for us to get as entrepreneurs. So this is the starting point. Next week, we're gonna turn up the heat a little bit. And remember to get your copy of why Doctors Don't Get Rich, because we're gonna be interviewing the author.

Probably at the end of this month. Okay, guys, great to see you. Thanks for letting me chat about this. I'll see you guys next week. Take care.