Free money ,passive income,earn dividend every month etc was some of the stories loaded on my Instagram and I ended up falling for it.
whats next I searched some stocks with higher dividend and added them, read about Singapore REITs are good for passive income and good dividend yield so added them too. All the sg REITs lately are green in portfolio very happy. Bought another lot next month again so far green very happy. Then I checked the dividend yield and surprised that it is not 100% and returns are also not very huge.
while the sg REITs such as $KEPPEL DC REIT(AJBU.SI)$ are green but usa stocks like $Johnson & Johnson(JNJ)$ did hit some correction. And when I look the trend they didnot seem to be much change in their share price. That disappointed me a bit. I also learned that in sg you pay 30% tax on dividends that makes it only 70% in return.
in summary, dividends are good and indeed can act like passive income. However, dividend play is a completely different ball game. paitence is the key, waiting 3 months to see some money and rest of the time looking at not much moving stock is boring .To build a regular passive income on dividends you need to pump a lot of capital first. Either you pick few dividend stocks and don't worry of the price action but keep pumping money every month To grow the size or buy lump sum. This for small investors will take months if not yearsl. Again there is a risk of the company going bankruptcy if not picked correctly. for eg i havea stock gives one dollar per stock as dividends but is in red donot move much, that does not motivate me to pump more money.
Hope was able to share my learnings, don't get carried away by hearing ppl say passive income, every month income but do consider the above things and think if you are keen in pursuing that route. All the best and let's all make money.$Apple(AAPL)$ $Microsoft(MSFT)$
Comments