What time does the stock market open?  What time does it close?  What about markets around the world?  Find out right here in this ultimate guide.  Plus, there is even a section where the times are even converted to eastern, central, and pacific.

Bonus Material: Free Dividend Portfolio Tracker Spreadsheet

When you first get into buying stocks, you might not pay attention to when the markets are open.

But, as you start to become a bit more savvy, you’ll start to wonder what time does the stock market open? When does it close?

It’s especially important to know if a company you’re looking to invest in plans on reporting earnings before market open or market close.

Prices can swing wildly after an earnings report.

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If you place an order after market close, it will sit in a queue until the next day when the market opens.

A company could report earnings and the price could change by the time your order is executed.

You could be paying 5% more for a stock without meaning to.

Hopefully this guide helps you understand when the market is open wherever you’re at.

Eastern, Central, and Pacific Time Zones

Instead of forcing you to do the time conversion yourself, I’ve gone ahead and created this table to show the market openings and closings around the world for eastern, central, and pacific time zones.

NYSE

• Eastern: 9:30am to 4:00pm
• Central: 8:30am to 3:00pm
• Pacific: 6:30am to 1:00pm

Nasdaq

• Eastern: 9:30am to 4:00pm
• Central: 8:30am to 3:00pm
• Pacific: 6:30am to 1:00pm

Toronto Stock Exchange (Canada)

• Eastern: 9:30am to 4:00pm
• Central: 8:30am to 3:00pm
• Pacific: 6:30am to 1:00pm

London Stock Exchange (United Kingdom)

• Eastern: 3:00am to 11:30am
• Central: 2:00am to 10:30am
• Pacific: 12:00am to 8:30pm

Tokyo Exchange (Japan)

• Eastern: 7:00pm to 1:00am
• Central: 6:00pm to 12:00am
• Pacific: 4:00pm to 10:00pm

Shanghai Exchange (China)

• Eastern: 8:30pm to 2:00am
• Central: 7:30pm to 1:00am
• Pacific: 5:30pm to 11:00pm

Euronext (European Union)

• Eastern: 3:00am to 11:30am
• Central: 2:00am to 10:30am
• Pacific: 12:00am to 8:30am

Hong Kong Stock Exchange (Hong Kong)

• Eastern: 8:15pm to 3:00am
• Central: 7:15pm to 2:00am
• Pacific: 5:15pm to 12:00am

Shenzhen Stock Exchange (China)

• Eastern: 8:30pm to 2:00am
• Central: 7:30pm to 1:00am
• Pacific: 5:30pm to 11:00pm

Deutsche Borse (Germany)

• Eastern: 10:15pm to 4:00am
• Central: 9:15pm to 3:00am
• Pacific: 7:15pm to 1:00am

Bombay Stock Exchange (India)

• Eastern: 10:15pm to 5:00am
• Central: 9:15pm to 4:00am
• Pacific: 7:15pm to 2:00am

National Stock Exchange of India (India)

• Eastern: 10:15pm to 5:30am
• Central: 9:15pm to 4:30am
• Pacific: 7:15pm to 2:30am

Korean Exchange (South Korea)

• Eastern: 7:00pm to 1:30am
• Central: 6:00pm to 12:30am
• Pacific: 4:00pm to 10:30pm

Swiss Exchange (Switzerland)

• Eastern: 3:00am to 11:30am
• Central: 2:00am to 10:30am
• Pacific: 12:00am to 8:30am

Australian Securities Exchange (Australia)

• Eastern: 7:00pm to 1:00am
• Central: 6:00pm to 12:00am
• Pacific: 4:00pm to 10:00pm

The post What Time Does the Stock Market Open in the United States and Around the World? appeared first on The Money Snowball.

Can a 15 minute talk about investing really be interesting and useful?  You better believe it!  Here are 6 eye opening TED Talks on investing that everyone should watch.

Bonus Material: Free Dividend Portfolio Tracker Spreadsheet

I’ve got a confession. I’m kind of obsessed with TED Talks.

It probably started around ten years ago when I was in college at Oregon State and they hosted a TEDx event.

It wasn’t anything remotely spectacular. No big name speakers. The topic wasn’t even that interesting. I vaguely remember it being about renewables and agriculture.

The thing is, even with a topic I wasn’t interested in, I still walked away impressed.

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Never had I been to an event where so many people spoke for such a short period and conveyed so much great information.

That’s the beauty of TED Talks. There isn’t one person up there rambling on for 45 minutes.

They’re quick 10-20 minute bursts. Most chock full of interesting tidbits.

It’s like reading a best-selling book in 15 minutes.

Ever since then I’ll catch myself browsing the TED website. Watching a video here or there whenever I get the chance. I can’t even imagine how many hours of talks I’ve watched at this point.

While watching Ray Dalio’s talk a few weeks ago, I got the idea to pull together the best TED Talks on investing. These are the results.

The post Top 6 Brilliant Investing TED Talks (You Need to See) appeared first on The Money Snowball.

You’re only as good as the tools you use.

If you’re working with bad tools that break all the time, you’re going to get bad results.

If you’re working with tools that don’t make the work easier, it’s going to take twice as long to finish.

When you use a hammer, you expect to hammer in nail after nail and get the same result.

If the hammer head keeps falling off or breaking, it might be time to get a new tool.

The same goes for the investment world.

You’ve got to have investment tools that help make the right decisions.  Whether that’s making the right investment, tracking that investment, or just helping you make a plan for the future.

Investment tools can be tricky.

Anything that deals with money seems to have 10x the consequences compared to any other decision.

When I was deciding which brokerage firm to start using, I spent hours researching them all.

How much were the fees? What kind of research tools do they have? Can I find those same research tools elsewhere?

On and on and on. Endlessly weighing the pros and cons.

This is why a lot of people don’t invest.

Making the decision on what tools to use can be painful and complicated.

This article will save everyone from at least a few hours of research.

If you’re like me, this will either be your starting point in the process or a validation step.

You may have heard about some of these tools in another article and are now seeing what others think.

Or this may be the first one you’ve read and will now go out to confirm that these are, in fact, great investment tools.

Either way, these are the tools I use often and I highly recommend them.

Investment Tools Definition

But first, I want to fill you in what falls into the category of “investment tools”

When most people think of financial tools, they most often think of a brokerage account.

That place you use to buy and sell stocks.

This is a common one but not the only one. Especially for people looking to achieve financial independence.

We need tools to track all our investments. Most of the time they won’t just be in the brokerage account.

You may have a 401k from work. Or maybe you opened a Roth IRA with Vanguard. There is also that savings account you have at the local credit union.

Part of being a smart investor is knowing where all your money is and what exactly it’s doing.

Then there is the research part.

Some brokerage firms have a lot of research tools, but I’ve found most are still lacking.

Those tools are great for day traders, but we’re investing for the long haul.

In general, investment tools are tools that will help us make smart, informed decisions about our financial future.

They break down into a few categories: trading, education, tracking, and analysis.

Brokerages fall into the category of trading. Trading is anywhere you buy or sell stocks, mutual funds, ETFs, etc…

Education is pretty clear. The places you can go to for great information to make informed decisions.

After making your investment, it needs tracking. You need to have a simple view of where your money is and what it’s doing.

Finally, there is analysis. These tools have a use before and after you make an investment. You need to narrow down your choices and analyze them to make a good investment.

You’ll also need to analyze your investments after their part of your portfolio to make sure they’re still good choices and fit your goals.

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Trading Tools

1. Robinhood

This is the go-to choice for buying equities (aka stocks).  The main reason being is all the trades are free.

There is absolutely zero commission.  The app is free to use too.  Who doesn’t love free?!

That’s a rarity in the investing world.  Most places at least charge $5 per trade.  If you’ve only got $100 to invest this month and charged $5, you’re already down 5%.

Robinhood means you can invest small amounts without eating into our returns.

The research tools aren’t as robust as some other firms, but, like I said, most of those tools are for day traders anyways.

You’re also not able to open up an IRA or Roth IRA with Robinhood…yet.  They say it’s in the works.

2. TD Ameritrade

This is a second brokerage I’m going to recommend because of their no-load ETFs and separate retirement accounts.

If you’re looking to open an IRA or Roth and use it to invest in index funds, TD Ameritrade is a great choice.

They offer a large selection of funds that are commission free.

Education Tools

3. PortfolioDB

PortfolioDB pulls together a number of portfolios that have been developed by professionals and amateurs and puts them all in one spot.

Their sort and filter function mean you can find the perfect portfolio to fit your needs.

Want a portfolio with a low drawdown?  You can find it.

Want to find a portfolio that’s a bit more aggressive that trades every once in a while?  You can find it.

Want to find the Robo-advisor portfolio that’s right for you?  You can find it.

It’s a great tool for perfecting your total investment portfolio.

4. Multpl

Multpl gives you nearly every market indicator you can think of.

What’s the P/E ratio of the S&P 500? Got that.

What’s the historical earning of the S&P 500? Got that too.

Want to know the World Gas Price? No problem.

It’s a fantastic resource to compare what you’re looking to invest and the rest of the market.

For dividend investing, I mainly use the market P/E ratio and the Dividend Yield.

5. Google Finance

While Google seems to have completely forgotten about Google Finance, it’s still a fantastic tool for research.

At the most basic level, you can look up the current stock price of any company.

But it offers so much more.

Balance sheets, income statements, cash flow statements…

Annual statements and quarterly statements.

Market news as well as the most recent company news.

You can even look at domestic trends.

Google tracks queries for certain terms around domestic markets.

As an example, you can see a trend of the furniture sector. Google looks at queries for words like “furniture, lighting, clock, chair, carpet, ikea” and so forth.

It gives you a good indicator if that sector is on the decline or rising.

There also may be a glimmer of hope that Google is going to do some touch-up to the site.

Currently, there is an “Under Renovation” alert at the top of the My Portfolio page. Fingers crossed.

The main draw of Google Finance is really how clean and simple it is. You can find these numbers a lot of other places, but none offer the simplicity that Google does.

Tracking Tools

6. Personal Capital

When it comes to tracking your investments across many accounts, there isn’t a better investment tool.

Personal Capital will link all your accounts and automatically update as the information changes.

They don’t have direct access to the accounts so your money is safe. It is looking at all the data to give a clear picture of where your investments stand.

You can even link your credit cards and mortgage to get a complete picture of your net worth.

This is an important metric when trying to reach financial independence.

By connecting checking accounts and credit cards, you’re also able to track cash flows in and out each month. It’s a nice reminder of whether the budget is working or needs to adjust.

You can track the performance of your retirement account as well. See how individual investments are doing or get a snapshot of the entire portfolio.

And, last but not least, the Retirement Planner. You could spend hours on this thing.

The planner takes the accounts you’ve linked, analyzes their performance and growth, and determines how prepared you are, based on the expected retirement date.

It calculates your monthly income and projected Social Security distribution. If there are other sources of income, like a rental property, that’s easy to add.

Where you can spend hours is the Anticipate Big Expenses tool. If you’re going to have a kid, go on a trip, send a kid to college, you can simulate all those events and see how it affects your retirement.

There are so many possibilities. Plugging them in just to see what happens leads to hours upon hours of wasted time for a guy like me.

It’s really the best tool out there for tracking all your finances.

7. Ultimate Dividend Tracker

Now I’m a little biased about this one, but necessity is the mother of all invention.

This is the spreadsheet I created to track dividend investments.

There wasn’t any other tool out there that gave me all the dividend information I wanted. Most of them treated dividend stocks just like any other and focused on value growth.

As a dividend investor, I want to know how much money I’m making from dividends each month. What’s the yield of my portfolio? How much of my growth is from value vs. from dividends?

How heavy am I invested in consumer defensive? What percentage of my total dividend income comes from Johnson & Johnson?

These are all important details for dividend investors and there wasn’t anything available to simply tell me that.
After hours of searching and searching, I just made it myself.

You can go ahead and download it here for free. Enjoy!

Download Your Free Dividend Portfolio Tracker

Analysis Tools

8. Zachs Stock Screener

The best free screener available.

When first looking for stocks to invest in, you need to narrow down the list. There are a lot of stocks out there and it doesn’t make sense to look at the ones that don’t meet basic criteria.

As a dividend investor, we want to only look at stocks that pay a dividend.

With Zachs Stock Screener, you can do that.

There are hundreds of metrics you can use. All with the ability to choose custom parameters.

Once you’ve got a screen dialed in, you can save it for later use and export the results to an Excel spreadsheet.

This is why I love Zachs so much. Not only can you filter out stocks based on criteria, you can select what information you want to see.

Say I want to only look at stocks that pay a dividend. I’ll set that criteria and the screener will only return companies that have a dividend greater than 0.

Now that I have that list, there are some other numbers I want to see.

I want to see the current dividend yield, the dividend growth, the earnings per share growth, and so on.

I select the checkboxes and there they are.

The list, with all that data, can export to Excel and be manipulated however you want.

9. Portfolio Visualizer

Investors like to do things themselves. You want to make life easy on yourself, but you don’t want an advisor or robot choosing everything for you.

You want to research different options and see which one is the best for your situation.

When it comes to analyzing your asset allocation, it doesn’t get much better than Portfolio Visualizer.

Don’t let the homepage scare you. There are A LOT of things you can do with Portfolio Visualizer.

Monte Carlo simulations. Frontier analysis. Something called a Black-Litterman model.

The one I get the most out of is Backtest Asset Allocation.

With this module, you can select what percent of your portfolio is invested in a certain market class.

You’ve got bonds of all different lengths, European stocks, Pacific Stocks, US Micro cap…you name it and it’s probably there.

At any time you can create three portfolios and compare them to each other over a time range you select.

Then see which one does better.

You can see how your portfolio would have done through the Great Recession of 2008.

Portfolio Analyzer is a phenomenal investment tool to determine how well all your assets work together.

BONUS. FeeX

Fees are the life-sucking monster out to destroy your investment goals of financial independence.

That may sound a bit dramatic but it’s true.

Fees will slowly eat away at your returns and increase how long it will take you to reach retirement.

That’s what FeeX is fighting.

FeeX is an investment tool that analyzes how much you’re paying in fees across all your holdings.

You have the choice of manually entering assets or connecting it to your account. The connection ability is surprisingly good, especially for 401k’s.

It will then analyze all your investments to determine how much could be saved by investing in funds with lower fees.

For instance, I plugged in a simple IRA fund I have with two different Vanguard mutual funds.

It said I have average fees and, over the next 34 years, I could save an estimated $520 dollars.

FeeX will first tell you whether you have high, average, or low fees. This is determined by whether FeeX knows of similar investments out there with lower fees.

Then it takes an average return for the assets and crunches the numbers. You see what your portfolio would look like in a certain amount of years vs. what a lower fee version would look like.

FeeX even gives you the ability to add an advisor. You can then see what those advisor fees are doing to your investments.

Even if you think you’ve got a good grasp on how much you’re paying in fees, I highly recommend running your portfolio through FeeX. You’ll probably walk away surprised.

Conclusion

And there you have it, 9 investment tools that are sure to make you a better investor.

All of them aren’t tools you’re going to use on a daily basis. Some of them are tools that you may only use once a year.

Regardless, the point of a good tool is making your life easier.

You may only use a plunger once every blue moon, but you don’t know when you’ll need it…until you definitely need it!

Download Your Free Dividend Portfolio Tracker

Do you use any of these tools?  Have any other recommendations?

The post 9 Free Investment Tools You Need to Start Using + a bonus! appeared first on The Money Snowball.

Bonus Material: Free Dividend Portfolio Tracker Spreadsheet

I couldn’t stand it anymore.

The internet had failed me.

Hours spent looking for websites, trying different spreadsheets, downloading apps…

Hours more spent inputting my portfolio only to realize that the info I was getting out wasn’t what I wanted to see.

There was always something missing.

How much did I earn in dividend payments for October of 2016?

What’s my annual average return over the lifetime of my portfolio?

What percentage of my portfolio is in consumer defensive stocks?

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Every site and app had a new take on the problem, but it never seemed to answer the real issue.

What I came to learn was that all these sites and apps were never developed for dividend investing.

Most are for general stock portfolio investing.  They’re not going to tell you everything that a dividend investor wants to know.

Having reached the end of my rope, I decided it was time to sit down and build my own dividend portfolio tracker.

The post The Ultimate Dividend Portfolio Tracker Unleashed appeared first on The Money Snowball.

If you ask any dividend stock investor how often they receive their dividends, they’d probably say quarterly.

That’s because most stocks pay their dividends every three months.

There is also a large group that pays out on a semi-annual basis.

What often gets overlooked are the monthly dividend stocks.

Stocks that send a paycheck your way every single month.  12 months a year.  120 months a decade.

They often get overlooked because few people worry about when their dividend gets paid.

If you plan on living off your investment dividends, it’s a good idea to add monthly dividend stocks to your portfolio.

What are Monthly Dividend Stocks?

Monthly dividend stocks are exactly what they sound like.  They’re stocks that pay out their dividend on a monthly basis.

Usually, a stock will pay out monthly dividends to avoid paying taxes.

Most of the time these are real estate investment trusts or REITs for short.  Because they’re able to pass on their taxes to the stockholders, it benefits them to pay out on a monthly basis.

Another common type of monthly dividend stocks is the closed-end fund or CEF.

CEFs are a pooled investment fund with a manager using that money to invest and oversee the portfolio.  Not all CEFs pay out a monthly dividend, but nearly all municipal bond CEFs do.

Municipal bond CEFs are funds comprised of, surprise surprise, municipal bonds.  The payments from the bond are passed on to the investors through monthly dividend payments.

Why Monthly Dividends instead of Quarterly?

This is a personal preference.  Some people don’t like going a month or two without some sort of cashflow coming in.

Remember, we’re thinking of living off these dividend payments at some point.  Having a reliable monthly income is pretty enticing.

If you are good at budgeting and can spread out your February dividend payments to cover March and April, that’s awesome!

Sometimes it’s good to have a little extra cash flow coming in during those months in-between quarterly payers.  It makes budgeting that much easier.

If you’re early in your investing timeline, investing in monthly dividend stocks might not be the right choice.

You should be reinvesting dividends at this point to grow your snowball.  There shouldn’t be much concern about when your dividends come in.

But, the later in life you get, the more you start to rely on those dividends to pay the bills.  You could then start shifting your money over to monthly paying stocks.

Two Types of Monthly Dividend Stocks

We’ve touched on the two most common ones, but let’s look at them a little more in depth.

REITs

REITs are like a mutual fund.  They allow big and small investors to join real estate ventures.

These REITs can be investments in commercial buildings, hospitals, land, warehouses, shopping malls…all sorts of real estate.

The law requires REITs to have payout ratios of at least 90%.  This means that most of the money the trust earns gets paid out in dividends.

They’re a great choice for income investors, like ourselves, and should be included in your dividend portfolio.

Choosing a REIT is simple.  Follow the guidelines of the 7 Truths Strategy and invest in the top ranked REIT.

But, if you’re looking for a significant monthly income, it would take a large investment in those REITs which could put your portfolio out of balance.

This is where CEFs come in.

Closed-End Funds

CEFs are also like mutual funds.  People invest money into a fund that a manager then uses to build a portfolio.

A CEF can have all sorts of goals.  There are CEFs that invest only in technology stocks.  There are some that only invest in mining and precious metals.

You might be thinking, “this sounds a lot like a mutual fund?”  Well, they are similar except one key difference: CEFs are closed.

Closed meaning the fund raised money through an initial public offering or an IPO.  They sell a fixed number of shares to raise the initial capital.  It works like any new stock on the stock market.

Because there are only a select number of outstanding shares available, the closed-end fund operates like a stock on the stock market.  The price can go up and down throughout the day.

The price is based on supply and demand as well as the changing values of the securities the fund is holding.

Are They Safe?

Monthly dividend stocks are as safe as any other stock.  There is a risk that the price will go down.

But, if you hold the REIT for a long enough period of time, the odds of you coming out ahead are much better.

We’ll get to the CEF investing strategy next, but they’re even safer than other stocks.

I recommend investing in closed-end funds that deal strictly in municipal bonds.

Muni bonds are one of the most boring investments around, which is usually a good signal they’re safe.

Because they’re backed by a city or state, there is almost no risk the value will go to zero.  The city or state would have to go BANKRUPT for you to not get any money back.

This is perfect for an income investor, like ourselves.  The main goal with our monthly dividend stocks is to smooth out our investment income.

We want to cover up the holes that our quarterly stocks are missing throughout the year.

Another fantastic benefit of investing in muni bond CEFs is the income is tax-free!

Unlike the dividends from other stocks, the income you get from these CEFs isn’t touched by the IRS.

Monthly Dividend Stock Investing Strategy

The strategy for investing in REITs is the same as investing in any other stock.

Follow the 7 Truths of dividend investing.  Invest in the top recommended REIT after performing your screen.

Investing in Municipal Bond Closed-End Funds takes a little more work.

You’re going to want to sign-up for a free membership at CEFConnect.  This is one of the largest closed-end fund explorers out there.

After signing up for a membership, go to the Fund Screener.

Click ‘Start New Search’

On the left, expand ‘Tax-Free Income’ and then click ‘Select All’

Then, down at the bottom, click ‘View Funds’

You’re then going to get a list of 150+ closed-end municipal bond funds.

Now we have to go about choosing the best ones.

The beauty of CEFs is they practically tell you when they’re undervalued.

With stocks, the P/E ratio is a decent indicator, but sometimes that ratio gets pushed higher based on future expectations.

Not so with CEFs.  Remember that CEFs are a collection of securities.  Those securities have a total value called the Net Asset Value or NAV.

The NAV, in basic terms, is what one stock is worth.

Say you had a $100 bill and sold 100 shares in that $100 dollar bill.  It’s safe to assume that the value of each share is $1.  That’s kind of how the closed-end fund works.

But, the price of that CEF doesn’t always reflect the NAV.  Sometimes the price can be higher than the NAV.  In that case, the CEF is trading at a premium.

If the price is lower than the NAV, it’s trading at a discount.

Power of the Discount

Just like when you’re shopping, we’re looking for the discounts.

In particular, the deep deep discounts.

In the fund screener, you’ll see a column with the header ‘Discount/Premium.’

Sort that column from lowest to highest.

Now you’re seeing the funds listed from the deep discount all the way to the high premium.

You don’t want to just buy the funds with the deepest discount, though.

Some funds regularly trade at a discount.  What we want to find are funds that are currently trading at a discount but usually have a price at or above their NAV.

Click on the most discounted fund on your list.

Then go to ‘Pricing Information’

You’ll see a graph showing the pricing information for that fund over the last year.  The x-axis showing whether it was trading at a discount or premium.

You can even expand the timeline to show the last five years.

You want to find the funds that are trading at or near their deepest discount in a five-year period.  This is referred to as the relative discount.

The relative discount is the average discount over a certain period.  When we sorted the CEF screener, we were basing the sort on the absolute discount.

A quick way to look for those relative discounts is by focusing on the fund’s Z-score.

Closed-End Fund Z-Score

The the following formula determines a CEFs Z-score:

Z = (current discount – average discount) / standard deviation

A negative z-score means the fund is trading at a price lower than its average discount.

A positive z-score means the fund is trading at a price higher than its average discount.

Luckily, CEFConnect has thought of that and allowed you to add a z-score column.

Go back to the CEFConnect screener and click ‘Criteria.’

Expand the ‘Pricing’ section on the left side and select ‘Z-Score 1 Year.’

If you hit ‘View Funds’ again, you’ll see the same list of CEFs but now there will be a column with the one-year z-score of each fund.

Now we can sort the ‘Premium/Discount’ column from low to high again and start searching for funds with a low z-score.

A z-score lower than -1 is worth a closer look.

For this example, I found Alliance CA Municipal Income (AKP).

Looking at the ‘Pricing Information’ over a 5 year period, I see that the fund is trading near it’s deepest discount.

This is definitely a fund I’d consider buying.

The Snap Back

If you do end up buying a CEF and are interested in earning a bit more than the annual tax free income, you can watch for the snap back.

What’s the snap back?  It’s when a CEF that is deeply discounted snaps back to it’s “average” discount.

In the case of AKP, you’ll see a table that lists the average discount or premium over the last 6 months, 1 year, and 5 years.

Say I buy AKP at a 10% discount and then I wait.  Each month I’m collecting a dividend with a tax equivalent yield around 8%.

Then, at some point, AKP snaps back to its 5-year average discount of -6% and I sell.

I’ll take those profits and go looking for another deeply discounted CEF.

Taking advantage of the snap back isn’t a must.

If you’re just looking for a guaranteed monthly dividend from your investments, buy and hold the CEF forever.  Collecting a dividend yield as high as 10% isn’t a bad consolation prize.

Conclusion

Following the 7 Truths and investing in high-quality, high-value dividend stocks will provide a great passive income.

But if you’re concerned about budgeting and want to make sure a monthly paycheck is coming in, consider rounding out your portfolio with monthly dividend stocks.

I’d recommend holding off shifting any of your portfolio to CEFs until you actually need to withdraw those monthly dividends.

Use the 7 Truths to build a strong portfolio.  That includes REITs.  Reinvest the dividends right back into more dividend paying stocks.  This will grow your snowball as quickly as possible.

Then, when the time comes to start paying the bills with your dividends, shift some of it over.   Start collecting that tax-free monthly dividend from CEFs.

CEFs won’t grow your snowball very fast but they do throw off plenty of powder.

Have any of you ever invested in closed-end funds?  Any recommendations?

The post The 2 Best Monthly Dividend Stocks [Free Bonus Strategy] appeared first on The Money Snowball.

We hold these truths to be self-evident…

It’s one of the most recognizable lines from the United States’ Declaration of Independence.

Did you know it also applies to a dividend investing strategy?

Ok, that’s a bad comparison, but you get the point.

When it comes to dividend investing, there are 7 truths that, if followed, will build you a strong portfolio.

It’s a strategy that beats the market and provides a secure passive income for years to come.

These truths may not be “self-evident” but they are based on common sense.  Once you know them, they’ll seem all too obvious.

We want to make sure our income snowball is growing as big and fast as possible and this is the best way to do it.

Common sense isn’t always good enough in the world of investing, though.  Common sense may have told you Kodak would be around forever because cameras are going to be around forever.

No one thought Kodak would avoid digital cameras until it was too late.

And that’s why these truths are also backed up by academic research and scenario testing.

Like the scientific method, you have an idea that seems to be true.

Then you come up with a strategy to test your idea.

Based on the evidence, you get feedback with proof that it’s true or it’s not.

Some of the greatest investors from around the world use these 7 truths.

This dividend investing strategy works for them, it works for me, and it’ll work for you.

• Truth #1: Quality Always Wins
• Truth #2: Value Beats Price
• Truth #3: Cash is King
• Truth #4: Slow and Steady Wins the Race
• Truth #5: Size Matters
• Truth #6: Safety in Diversity
• Truth #7: Survival of the Fittest

Truth #1: Quality Always Wins

Common Sense Truth:  Quality companies are going to perform better than bad companies.  Quality companies have a proven track record of providing great service, putting out great products, and having great leadership.

You don’t want to go to bad restaurants, so why would you want to invest in bad companies?

Dividend Investing Strategy:  Invest in companies that have been paying dividends for 25 years or more without a reduction.

Evidence:  The S&P Dow Jones Indices

Proof:  The Dividend Aristocrats are companies that have been raising their dividend each year for at least 25 years.  As a group, they have outperformed the S&P 500 by over 2% annually.

Truth #2: Value Beats Price

Common Sense Truth:  If I were to offer you a dollar bill or the first silver dollar ever minted, which would you take?  You’d take the first silver dollar ever minted because it has a higher value.

Both are the same price, but one has a higher value.

Same with purchasing a dividend paying stock.  One may have a lower price, but there could be better value in a higher priced stock.

Dividend Investing Strategy:  Rank from highest to lowest based on dividend yield.

Evidence:  Heartland Advisors Review of Dividend Historical Returns

Proof:  The highest paying dividend stocks have outperformed the lowest paying stocks by over 1.5% annually for the last 90 years.

Truth #3: Cash is King

Common Sense Truth:  The company you invest in needs to have the money to pay for their dividends.  Depending on how many outstanding shares there are, that could be quite a lot.

If the company isn’t earning enough to pay the dividends, they’re going to have to dip into reserves.  That’s something which can’t go on forever.  It’s a sign the dividend may be reduced…or even cut.

Dividend Investing Strategy:  Rank based on payout ratio from lowest to highest.

Evidence:  Credit Suisse Quantitative Research: High Yield, Low Payout

Proof:  The high yield and low payout portfolios (low payout ratio) generated an annualized return of 19.2% versus 11.16% for the S&P 500.

Truth #4: Slow and Steady Wins the Race

Common Sense Truth:  Some level of risk is good.  Too much of it can be bad.  Having stocks with low risk provides peace of mind to continue investing through the tough times.

Companies that have grown through recessions and economic downturns are the type of companies you want to invest in.  It makes investing easier when everyone around you is in a panic.

Dividend Investing Strategy:  Rank based on the stock beta from lowest to highest.

Evidence:  S&P 500® Low Volatility Index: Low and Slow Could Win the Race

Proof:  Low-risk stocks beat the S&P 500 by more than 3% per year over a 15-year period ending in September of 2011.

Truth #5: Size Matters

Common Sense Truth:  Growing companies are good.  Companies that stay the same or shrink are bad.  It’s pretty simple.

Companies growing their earnings means things are strong.  They’re doing a good job and will likely continue to.  If their earnings haven’t gone up in a while, that’s cause for concern.

Poor growth while still paying a dividend can’t go on forever.

Dividend Investing Strategy:  Look at the lower of a stock’s earnings per share or dividend increase.  Rank the stocks from highest to lowest based on that value.

You want to look at the lowest of those two because some companies will continue to increase dividends even though they’ve had terrible earnings.

We need to account for the low earnings per share.

Evidence:  S&P 500 Index: Dividend Growers Have Outperformed Over Time

Proof:  Companies growing their dividend have annually performed 2% better than stocks that don’t grow their dividend.

Truth #6: Safety in Diversity

Common Sense Truth:  If you’re at the blackjack table, you don’t bet all your money on one hand.  You spread it out over many hands.  Hopefully with most of them winners and only a few of them losers.

Betting everything, on one hand, means you have a higher probability of losing it all.  Same goes for investing in stocks.

Spread the bets around.  Invest in many stocks to lower your risk of big losses.

Dividend Investing Strategy:  Buy 30 stocks with at least 1 stock in each sector.

Evidence:  Some Studies of Variability of Returns on Investments In Common Stocks by Lawrence Fisher and James H. Lorie

Proof:  Owning roughly 30 stocks lowers risk by 95%.

Truth 7: Survival of the Fittest

Common Sense Truth:  Say you worked somewhere for 25+ years and received a paycheck every month.

The check amount always stayed the same or went up.  As long as you could stand the job, you’d keep working there.

Now say after all those years, you get a check with a lower amount.  Or even worse, you stop getting a check.

Month after month it never shows up.

You’d quit the job and go somewhere else, wouldn’t you?

Same with dividend paying companies.

If they’ve been paying dividends for 25+ years and then lower their payment, or flat out stop, something must be going wrong.

Time to sell that stock and move on to a better one.

Dividend Investing Strategy:  Sell when a company reduces or cuts their dividend payment.

Evidence:  S&P 500 Index: Dividend Growers Have Outperformed Over Time

Proof:  Stocks that reduced or cut their dividends had a 0% return from 1973 to 2013.

Conclusion

Told you they would seem a bit too obvious once you knew them.

This is half of investing, though.  Leave your emotions on the sidelines.  Simple, smart investments are the way to go.

When you look to earn income, it’s the simple stock pick held over a long time that works out the best.

The post The 7 Truths: A Dividend Investing Strategy appeared first on The Money Snowball.

How to start investing may be the most important step on your journey to financial freedom. Learn the basics, investing books to read, and much more!

Bonus Material: Free Financial Freedom Calculator

If a limo was traveling the road to financial freedom, earning more money would be in the backseat with sunglasses on.

Earning money gets all the attention.  It’s the celebrity.    Passive income.  Side hustles.  Residual income.  It’s the sexy one on the cover of all the blogs.

You know who’s driving that limo?  The one doing all the work?  Investing.

Investing is the one that’s going to get you to the destination of financial freedom.

Investing is the magic behind an income snowball.

TAKE THE FREE PASSIVE INCOME QUIZ

The question people have is: how to start investing?

You grow up with the idea that you have to earn money at some point.  Without earning any money, you wouldn’t be able to buy food.  You wouldn’t have a place to live.

Investing your money never gets talked about.

Stock prices.  P/E ratios.  IRAs.  Roth IRAs. 401k.  So many random letters and numbers.

It’s hard to know where to begin.

This guide will answer a lot of those questions.

Table of Contents

• Investing Basics
• How to Start Investing for Beginners
• Objectives of Your Investments
• How to Make Smart Investments
• A Simple Investing Strategy
• How to Open an Investing Account
• Starting Investing Books to Read
• Investing as a Young Person 

Investing Basics

Let’s start with the basics.  Before you can learn how to start investing, you need to know what is investing?

Investing is taking your hard earned money and putting it somewhere to grow.  Where you decide to put it will depend on how fast it will grow.

It will also determine how likely you are to lose it.

Some investment choices are riskier than others.  Usually, the riskier choices make your money grow faster.

The ultimate goal is to find the fast growing rate with the lowest risk.  That growth rate called the rate of return or interest rate.

There isn’t a one size fits all with risk.  Some people can handle more risk than others.

Types of Investment Accounts

Where you put your money to grow is in an account.

The most common types you hear about are:

• Savings
• Money Market
• Traditional IRA
• Roth IRA
• 401k
• Brokerage

The first two are non-retirement accounts.  Traditional IRA, Roth IRA, and 401k are all retirement accounts.

A brokerage account can be either a non-retirement or a retirement account.  It’s a bit messier than the other ones but I want to include it because that’s where we start investing in corporate stocks.

Savings and Money Market Accounts

Savings and Money Market accounts are incredibly safe but also offer you next to nothing in interest.  They are both FDIC insured which makes them as safe as you can get.

FDIC insured means that your money is backed by the government.  Even if the bank fails, you’re still going to get your money.

You might get a slightly higher interest rate on a savings account than a money market account.

It used to be that you had easier access to money in a money market account, but that’s changing.

Both are easy to pull from when you need the cash.

Retirement Accounts

IRA stand for Individual Retirement Arrangements.

Roth IRAs and traditional IRAs are the most common retirement accounts outside of a 401k.

Tax advantages are what make these two accounts so special.

Traditional IRAs are pre-tax accounts.  Meaning you can actually deduct what you put into the account on your taxes.  There is one exception to this.  If wherever you work offers a 401k, you may only be able to deduct a small part.  In some situations, you may not be able to deduct anything.  It all depends on your household income.

Roth IRAs are post-tax accounts.  Meaning you don’t get any benefit during tax season for the money you contribute.

But, when the time comes to start pulling money out, you get to do that tax-free.

While your contributions to a traditional IRA are tax deductible, you still have to pay taxes on the money you withdraw during retirement.

With Roth IRAs, that money is tax-free.

There are pros and cons to both.  There are a lot (a lot!) of variables that go into deciding which to invest in if you don’t have a 401k.

If I didn’t know your situation and had to pick one…I’d go with the Roth IRA.

401k

A 401k is like a traditional IRA.  The money you contribute is pre-tax and subtracted from your taxable income.  Plus, it has a MUCH larger contribution limit than a Roth or traditional IRA.

This year (2017) the limit is $18,000.

Like a traditional IRA, you will end up paying taxes when it’s time to start withdrawing money.

You don’t pass up the opportunity to deduct that kind of money from your taxes, though.  If your work offers a 401k, TAKE ADVANTAGE OF IT.

Brokerage Accounts

This is where we start talking about stock trading.

Brokerage accounts are the places we put money to start trading in stocks.

When you see advertisements for ETrade, TDAmeritrade, Scotts…these are all brokers.

You put money into an account and then buy investments that trade on the stock market.  Most of these will be stocks in companies, but we’ll talk about some other things you can invest in through brokerages later.

Within a brokerage account, you can open a Roth IRA or traditional IRA account.  This way you get those nice tax advantages while trading stocks.

It can seem a bit confusing.  Just know that not all brokerage accounts are retirement accounts, but retirement accounts can be brokerage accounts.

Types of Investment Products

In order to figure out how to start investing, you need to know what you’re investing in.

When people talk about “investment products” they’re talking about:

• Stocks
• Bonds
• Certificates of Deposit (CDs)
• Mutual Funds
• Exchange Traded Funds (ETF)
• Money Market Investments
• and a host of other things

From our limo example, the investment product is the engine.

Some engines have more horsepower and have the potential to get you to your destination faster.  Others have less and will get you there slower.

I say potential because the more horsepower an engine has, the higher likelihood of breaking down.  At least for this example.

Ranking the top investment products from highest risk to least risk would look like this:

1. Stocks
2. Mutual Fund
3. Exchange Traded Funds (ETF)
4. Bonds
5. Certificates of Deposit (CD)
6. Money Market/Savings investments

An argument could be made for shifting a few of those around, but most would agree this is the order in general terms.

Details on each investment product would be a massive blog post on its own.  I will get around to writing those, but in the meantime, Investopedia has great write-ups on each one.

Stocks and exchange traded funds are bought and sold on the stock market through your brokerage account.

Mutual funds, bonds, CDs, money market investments, and saving investments are typically purchased through individual firms, banks, or even the US government.

How to Start Investing for Beginners

The first thing I tell anyone when they ask how to start investing is to start as soon as possible.

Why is it so important to start immediately?  Compound interest.

Compound interest is the true power of an income snowball.  It’s the surest way to financial freedom.

Albert Einstein called compound interest the “the eighth wonder of the world.”

What makes it so powerful and why is it important to start investing as soon as possible?

Take two friends who are the same age: Susan and Bill.

Susan discovered the power of compound interest and started investing $5,000 per year when she was 25 and kept it going until she was 35.

Over the 10 years, she invested a total of $50,000.

Bill wasn’t quite sure about compound interest and didn’t start investing $5,000 per year until age 35.  Thinking he needed to catch up, Bill kept that up for 30 years until the age of 65.

In total, Bill invested $150,000.

Bill and Susan both used the same investment products.  They both had the same rate of return.  Susan started earlier and invested less, but everything else was the same.

Who do you think had more money at the age of 65?

There was a little part of you that thought Susan…and you’d be right.

Susan would have $602,070 by age 65.

Bill would $540,741.  This is assuming both had a rate of return of 7%.

Susan invested $100,000 LESS and still ended up saving $60,000 more than Bill!

What About Chris?

Let’s take our example a bit further.

Say you’ve got another friend named Chris.

Chris started investing $5,000 per year at age 25 like Susan.  But unlike Susan he didn’t stop at 35.  He kept investing $5,000 every year until he reached 65.

Over those 40 years he invested a total of $200,000.  Just $50,000 more than Bill.

How much more do you think Chris had than Bill and Susan?  $100,000 more?  $200,000?

Chris ended up saving $1,142,811!  Over $500,000 more than Susan.

This is the power of compound interest.  So the first thing you need to know about how to start investing is to start right now.

Should I Pay Off Debt First?

This question comes up a lot.

If you have credit card debt, the answer is simple…YES!  Get rid of your credit card debt as soon as possible.

The interest rate on credit cards will kill your financial future.  Pay them off and never carry over a balance ever again.

Phew, ok.  Another question I hear a lot is around paying off student loans.

This one can go either way.

Take a look at your student loans and see what kind of interest rate you have.

If you’ve got an interest rate below 4%, I’d start investing now.

If your loans have a rate above 4%, I’d try to get them paid off as soon as possible.

It’s a pretty safe assumption that the stock market is going to return at least 7% over the long run.

For loans below a 4% rate, you’ll be at least gaining 3% more than you’d be losing.

Objectives of Your Investments

Now that you know the basics of investing, there is one more topic to cover before getting into the mechanics of how to start investing: what are your objectives?

What are you investing this money for?  Retirement?  Down payment on a house?  Pay for your children’s college?  Income?

Deciding what the objective is and why you want to start investing is the first question before you begin.

Investing for retirement is going to be different than investing for a down payment on a house.  And both are going to be different than investing for your kid’s college.

Four Buckets

In general, investing should start with 4 buckets.

1. Emergency Fund
2. Short Term
3. Long Term
4. Retirement

Think of each bucket like an account with a certain purpose.

Emergency Fund

The emergency fund is pretty self-explanatory: it’s for emergencies.

Unexpected doctors bills, home repairs, car repairs, you name it.  Having some cash set aside for a rainy day will put your mind at ease.

This investment needs to go in a savings or money market account.  It’s not going to gain a lot in interest, but that’s OK.  This is money we’ll need quick access to at any moment

Short Term

Short term investments are anything you want to save for within the next 5 years.

This could be where the down payment on your house goes.

Money in this account should also be going into a money market or savings account.  Investing in the stock market or an exchange traded fund is a bit risky for something that you’ll need access to in 5 years.

You could also invest in Treasury Bonds to get a little more return on your savings.  In this case, you’d want to decide when you’ll need the money ahead of time.

Treasury Bonds have a maturity date which is when you get your money back.  This is why they have a higher rate of return.  It’s not easy to get your money when you want to.

Long Term

Long term investments are goals that you’ve set beyond 5 years.

If you don’t have a long term goal, I recommend investing for dividend income.

Even if you do have a long term goal, investing for dividend income is a smart choice.

Your money will grow at a rate as good or better than the rest of the market.  Plus, you get the added bonus of receiving monthly or quarterly checks.

Dividends should be reinvested but, at a certain point, you could start using them to pay bills.  You can even live off them if your investments grow enough!

Regardless, dividend investing will grow your savings enough to buy that beach house you’ve always wanted.

Here is where you’d want to open a brokerage account and invest there.

Retirement

We’re all going to retire at some point.  No one wants to be clocking in and clocking out of a job until their dying day.

Your retirement fund is there to cover you when you finally do choose to call it quits…at least from your day job.  Hopefully, you find a hobby that will earn a little residual income on the side.

The retirement fund is something you know you won’t touch for a long time.  It’ll be at least 5 years before we need to touch any money in this bucket.

This is where your work’s 401k comes in handy.

If your work offers a 401k, there is a group of funds already selected for you to choose from.

If your work doesn’t offer a 401k, this is where a retirement account inside a brokerage account comes in handy.  You can open a Roth IRA or traditional IRA and still get the tax benefits.

How to Make Smart Investments

Now that we know about the four buckets, let’s talk about some smart investment choices for each of those buckets.

Emergency Fund

How to start investing in an emergency fund is pretty simple.  You can open a savings account with the bank you currently use and start putting money into it for an emergency fund.

If you’re feeling a bit adventurous, you can search for the best high-yield online savings account and start putting your money there.

It might earn you a little bit more interest.  And in the savings game, every bit helps.

Short Term

Follow the same rules as the Emergency Fund.

Long Term

Long term investing is done through individual stocks or index funds.

If you want to invest in stocks, buying stocks from the list of Dividend Aristocrats would be very smart investments.  Build a portfolio of diversified aristocrats and you’ll be all set.

If buying individual stocks sounds like too much work, index funds would be another smart investment.

Index funds are passively managed.  This means they don’t charge high fees to the people investing in them.

Stay away from mutual funds!  Mutual funds are actively managed funds that charge a high fee.  It’s usually 1% or more to the investor.

They do this by making you think the fund can achieve a higher rate of return than an index because it’s managed by someone who “knows better.”  Study after study has proven that’s not true.

Plus, the high fees will kill your return in the long run.  Remember the power of compound interest?  Even a 1% lower return means missing out on thousands of dollars.

Ok, back to index funds being a smart investment.

Index funds are bought on a whole range of areas.  Funds that follow the S&P 500, S&P 1500, international markets, emerging markets…pretty much anything you can think of.

Vanguard index funds are always a great choice because the founder, Jack Bogle, hates fees.

Retirement

Retirement follows the long-term investing guidelines.

You can open a Roth IRA or a traditional IRA and start investing in stocks or index funds.

The 401k your work offers can vary.  Usually, they offer a select group of funds for you to choose from and invest in.  Sometimes they’ll even allow you to invest in individual stocks.

Not knowing what those funds will be, try to stick with index funds.  These are going to have the lowest fees and FEES MATTER.  Remember, fees are a four letter word.

I recommend going with index funds over investing in individual stocks in your 401k.

Best to set your 401k on autopilot and forget it.  This way you only need to check in once or twice a year and be on the path to a safe retirement.

A Simple Investing Strategy

Your buckets are in place.  Your accounts are set up.  You’ve got an idea of what kind of stocks and funds you’re going to invest in.  Now it’s time to get detailed about how to start investing.  You need a simple investing strategy for each bucket.

Emergency Fund Investing Strategy

This is the first bucket you fund.  Because you don’t need to choose funds or stocks, the strategy is simple: put cash into a savings account and leave it.

Save up to at least 3 months worth of expenses in your emergency fund.

You never know what is going to happen on the road of life.  This money is going to give you peace of mind that you’ll be able to financially handle whatever comes along.

Retirement Fund Investing Strategy

Next up in your investment strategy is tackling the 401k.  If you’ve got a 401k, there is a good chance your work also has a matching program.

Most will match up to a 5% investment.  Some will do weird things like matching up to 50% of a 6% investment.

Either way, find out what that smallest investment required is to meet the company match and start investing!  You’re missing out on free money if you don’t.

It’s like work is offering you a raise and you’re not picking up the check.

Now once you’ve set up that automatic deposit into your 401k, you need to choose what to invest in.

Since I don’t know what funds you have access to, you’ll have to do a little research.

In his book Money: Master the Game, Tony Robbins interviewed David Swensen.  Swensen is the Chief Investment Officer of the Yale Endowment Fund.  The top name in the college endowment arena.

He recommends global diversification across many assets.  This creates a resilient portfolio that isn’t wholly dependent on the US stock market.

The Swensen’s portfolio looks like this:

• 20% Domestic Stocks
• 20% International Stocks
• 10% Emerging Markets
• 20% REITs
• 15% Long Term Treasuries
• 15% TIPs (Treasury inflation-protected securities)

This is a fantastic portfolio that covers a lot of the market, reduces risk, all while still giving you a lot of upsides.

Since I don’t know what funds you have available in your 401k, I can’t tell you which ones to specifically invest in.

Look at the list of what you have available.  The names of the funds should give you some sign of which one of these 6 criteria it falls into.

Just remember…FEES ARE BAD.

Retirement Redux or Long Term or Short Term

And now it’s time for you to decide which is most important.

Since the emergency bucket is full and you’re getting all that free money from work, it’s time for to decide where to go next.

Do you want to save more for retirement?  Try to retire early?  Then I’d say open up a Roth IRA or long term account.

Want to buy a house soon?  Go after that short term bucket.

If you’re leaning towards short term, follow the strategy for an emergency fund.  Start stowing away as much cash as you can in a savings or money market account.

If you know you’re not going to need the money for exactly 5 or 6 years, purchasing treasury bonds might be a good way to go.

Retirement Redux and Long Term

Investing long term and investing more for retirement can go hand in hand.

You may have a dream in mind that is 10 or 15 years out in the future.  Dreams can change, though.

What you thought was savings for a long term purchase could turn into helping pay for retirement.

That’s OK!  Having more money than you know what to do with is a great problem to have.  Maybe the best.

What you need to decide is whether you want to start investing those long term monies in a retirement account or a brokerage account.

The retirement account is most likely going to be a Roth IRA which means you can’t withdraw money until age 59.  If you do, you’ll have to pay a penalty and taxes.

Whether you decide to go with a retirement or long term brokerage account, the simple investing strategy here is to invest in dividend stocks.

The simplest approach would be to invest in the dividend aristocrats.

They usually beat the return of the S&P 500 AND have a lower risk.  Plus, there is the added benefit of receiving dividend payments throughout the year.

Simple Long Term Investing Strategy

Download the list of dividend aristocrats.

Each company falls into a sector.  There are 11 sectors.

To get plenty of diversification and lower risk, you want to pick companies from various sectors.

A manageable portfolio of 30 stocks has almost as low a risk as investing in the entire S&P 500.  30 is a lot easier to keep track of than 500.

Try to pick three stocks from each sector.  If you can’t, that’s OK.  Some sectors don’t have three dividend aristocrats to choose from.

Track how much you invest in each sector and stock.  Make sure that one stock or sector doesn’t get overweight compared to the rest.

If you’ve got $1,000 invested in a portfolio and $900 of it is in one stock, you’re in trouble if that stock goes down.

A 10% loss in that one $900 stock would cost you $90.

Say you had an even distribution of that $1,000 across all 30 stocks.  Each one with an investment of $33.  That 10% drop is only going to cost you $3.30.

Behold the power of diversification!

That’s it!  You’ve got a simple investing strategy for your long-term dividend account!

This isn’t to say there aren’t more sophisticated stock picking methods out there.  The dividend aristocrats have consistently beaten the market over the long term.  Creating a portfolio invested in those stocks is going to be a safe and simple strategy.

How to Open an Investing Account

You’ve got to open a brokerage account before you can start trading though.

With so many options out there, it’s hard to know which one to choose.

I’m partial to Robinhood.  You might be thinking “I’ve never seen any commercials for Robinhood.”  And that’s not surprising.  You wouldn’t

Robinhood is a fairly new player in the game that offers free trades!  This is a huge deal.

My other recommendation, Charles Schwab, costs $4.95 per trade.  That means if you invested $495, you’d already be at a 1% loss because of the $4.95 fee.

When Robinhood wasn’t available, I couldn’t invest $50 or $100 each month.  Those $5 fees would add up quick.

This is why I’m such a huge fan of Robinhood!  No fees!  That means you can invest as little as you want per trade.  There is no worry about fees eating into your returns.

Now, it’s not all roses and sunshine with Robinhood.  They currently don’t offer the ability to set up a Roth IRA or a traditional IRA.  If that’s the route you want to go, I definitely recommend Charles Schwab.

Maybe Robinhood will get around to that feature soon (@Robinhood: Hint hint).

If you decide Robinhood is right for you, setting up an account is easy.

Setting Up a Robinhood Investment Account

Go to Robinhood.com and click the “Sign-Up” button in the top right.

Fill in all your basic information to set up an account.

Next up is your contact info…

In order to keep money laundering from becoming an issue on the stock market, federal law requires anyone trading stocks to verify their identity.  Since you’re about to start trading stocks, you need to verify who you say you are by submitting your social security number.

Once your identity is verified, you’ll set up a bank account that will be used to fund your brokerage account and that’s it.  You’re now the proud owner of an investment account!

You’ll download the app from the iTunes store or Google Play, login and be trading in minutes.  All commission free!

Hopefully, this massive guide answered most every question you’d have about how to start investing.  There is a lot to cover in the world of investing, though.

Starting Investing Books to Read

Investing isn’t just nuts and bolts, though.  It’s not just about understanding diversification, what stocks are, and what type of accounts to open.

There is a lot of psychology that goes into investing.  The better you understand how the market works, the easier it will be to ride the ups and downs.

Or maybe the nuts and bolts weren’t enough.  Maybe you’ve gotten a taste and want to know more about different investing strategies.

Continued reading and education never hurt anyone!

Here are a few great books that I recommend for people starting their investment journey.  Not all of them are about the details of investing.  They will all make you a better investor, though.

The Little Book That Still Beats the Market

A fantastic book that you could read in a few hours.  It’s that little.  Joel Greenblatt outlines an incredibly simple formula for investing.  It’s a bit more complicated than investing in dividend aristocrats, but still really simple.

Plus, it’s just a fun read.

Unshakeable

Tony Robbins isn’t known for his financial advice but he’s written a great book about the psychology of investing.  A shorter companion to his previous best-seller Money: Master the Game, Unshakable is about being fearless while investing.

Understanding that things are going to go up and down but all will work out in the end.  You’ve got to be patient and see things through.

He also pulls back the curtains on some real shady stuff that financial advisors have been doing for years.

It’s an all around great book to get you started on an investing journey.

Think and Grow Rich

First published in 1937, this one is a classic.

It doesn’t involve investing advice but talks more about wealth advice.  Napoleon Hill lays out the steps to wealth.  There are stories from millionaires like Andrew Carnegie, Thomas Edison, and Henry Ford to illustrate his point.

This is another one that gets you into the right mindset to be an investor.

The Intelligent Investor

Another classic by Benjamin Graham.

Here are the nitty gritty details of value investing.  A system that Warren Buffett uses.  He has called this “the best investment book ever written.”

Value investing is not for the day trader.  Which is good, you don’t want to be a day trader.

Value investing is all about the long term and using disciplined analysis to pick your investments.

The Intelligent Investor has a place on EVERY serious investor’s bookshelf.

Money: Master the Game

I know I already put a Tony Robbins book on here, but this one is just too fantastic not to include.

It’s a long one.  If you can get through Intelligent Investor, you can get through this.

Money Master the Game is so great because it walks through so much.  While it won’t talk about investing in individual stocks, this book will set you up on a path to financial freedom.

It goes quite a bit more in depth than Unshakeable.  So if you read that and still want more, this is one to definitely pick up.

A Reading Guide

Start with Think and Grow rich to get yourself in the right mindset.

Then read Unshakeable and Money Master the Game to get your general finances in line and put a plan together to gain financial freedom.

Finally, read The Little Book that Still Beats the Market and The Intelligent Investor to get a good foundation for investing in stocks.

That’s it!  No more excuses.  You’re all ready to start investing.

Investing as a Young Person

Alright, let’s put to rest just one excuse people have about investing: “I’m too young.”

That’s a HORRIBLE excuse.  If anything, investing while you’re young is the best thing you can do.

Remember compounding interest?  That “eighth wonder of the world” doesn’t care about how old you are.  It works just as well when you’re 8 or 80.

People think of investing as something you do when you’re retired.  Or about to retire.  Or have a steady career and family.

Nope.  Do it as early as you can.

Imagine that summer job you had as a teenager.  Making minimum wage 5 days a week for the three months you were out of school.

In Oregon, the minimum wage is $9.75.

$9.75 x 40 hrs per week x 12 weeks in a summer = $4,680

Now let’s say you are 15 years old and start investing that much every year until age 30.

Your investments would have grown to $138,748!  Sounds like a pretty nice down payment on a house.

Or you could not touch it and keep investing.

Keeping up with $4,680 a year.  $90 a week.  You’d be a millionaire by age 55!

You’re never, EVER, too young to start investing.

The post How to Start Investing: The Ultimate Guide appeared first on The Money Snowball.

There is roughly 3,000 dividend paying stocks in the United States alone.

That list doesn’t include all the global companies paying dividends.

So where does one start their search? With the Dividend Aristocrats.

You may be thinking “a fancy name like that must make them pretty special” and you’d be right.

The Dividend Aristocrats first have to be part of the S&P 500. That means they’re already one of the 500 largest companies in the US traded on the New York Stock Exchange.

Not only that, but the aristocrats must have increased their dividend payments every year for at least 25 years.

That narrows a list of 3,000+ stocks to a select group of 51 in 2017. The list changes every year as some get added and others fall off.

Through great markets and terrible markets, these dividend aristocrats have kept increasing their dividends.

Want to know who the Dividend Aristocrats are?

The Importance of Increasing Dividends

By increasing dividends, these companies are helping you fight inflation.

The long-term goal with dividend stock investing is to build an income snowball. With a large enough snowball, you can live off the passive income dividend payments.

A 3% annual inflation will eat away at the value of those dividends unless the company increases them with each year.

Think of it this way. Say you own a stock that pays you a $2 dividend. Not much but it allows you to buy a $2 candy bar.

Ten years down the road that $2 candy bar now costs you $2.70 because of inflation. That $2 dividend payment doesn’t buy what it used to.

This is why increasing dividend payments is so important. It helps support the relative value.

But there is also a hidden bonus. Stocks that increase their dividend payments also end up performing better.

Historical Performance

Increasing dividends are great, but you also want investments to do well.

The aristocrats have definitely performed well.

Over the years, the dividend aristocrats have outperformed the general market and not by a small amount.

Over a 10 year period, the dividend aristocrats have beat the S&P 500 Index by about 2.64% annually.

To put that in perspective: say you invested $10,000 in an S&P 500 index and another $10,000 in a portfolio of aristocrats.

Your money in the S&P 500 would grow to $19,653. Pretty great.

The portfolio of dividend aristocrats would have grown to $25,078. Pretty awesome!

You made an extra $5,000!

A 2.64% difference could be thousands of dollars in extra savings. Which also means more passive income.

Great performing stocks are…great. But great performing stocks with low volatility and low risk are stellar!

Yet again, the dividend aristocrats deliver.

Risk of Aristocrats

The S&P 500 takes some big hits during recessions (2000-2002, 2008) but the aristocrats hold strong.

They still drop, but it’s not as bad as the rest of the market.

You want to see some resiliency out of a portfolio during the bad times.

Dividend aristocrats do better than the rest of the market for two reasons:

1)  They’re paying cash

These companies have already decided to reward their stock holders with dividend payments. They can’t be a company in the start-up phase of business. Cash is their blood supply, so they can’t be a business that is blowing through it to stay afloat. They can’t be taking risky bets.

This means their stock is going to be less risky.

2) They’re going to be selective

Because they can’t be reckless with their cash, these companies are going to play it safe. They’re going to be selective with their business investments.

Being smart with cash allocation is a hallmark of aristocrat companies. They know part of that money is going to investors in the form of dividends so they have to make good decisions with what’s left.

That decision-making process means added value to the investor.

Now you know how awesome dividend aristocrats are, so let’s talk about how to get started investing in them.

Building a Dividend Aristocrat Portfolio

You know the beauty of dividend aristocrats. You’ve got the list of 2017 companies.

Why is it you can’t start buying?

Diversification is the key. You’ve got to make sure you’re building a portfolio in such a way you don’t get burned.

Imagine you’ve bought 10 stocks for a total investment of $100.

Without paying attention to diversification, you could have $90 in one stock and $10 in the rest.

If that one stock with 90% of your money runs into problems and drops 20%, your portfolio is going to drop nearly 20% as well.

(1-0.2) * $90 = $72

That’s an $18 loss you took.

Instead, if you’d spread out that $100 evenly to 10 stocks, a 20% drop in one wouldn’t be as bad.

(1-0.2) * $10 = $8

Now it becomes a $2 loss.

There are three criteria you want to watch out for: sector balance, income balance, and value balance.

Sector Balance

Companies fall into a series of broad sectors. Whatever industry they serve places them in a business sector.

They are:

• Consumer Cyclical
• Industrial
• Healthcare
• Consumer Defensive
• Technology
• Financial
• Basic Material
• Utility
• Energy
• Communications
• REITs

Often times the stocks in each sector will move together. This isn’t an exact science, but more a rule of thumb.

It’s best not to get too invested in one specific sector for the same reason as the example above.

Income Balance

The reason you’re building a portfolio of dividend aristocrats is to grow an income snowball.

With a bigger portfolio of dividend paying stocks, the more passive income you earn.

Because income is the end goal, you need to watch out for how much each stock is contributing.

Down the road, one stock could be providing 25% of your income and then they decide to shrink their payment. Or (gasp!) if they stopped paying dividends altogether, you’d have a serious problem!

Make sure you keep track of how much one stock pays for your total portfolio income.

You’d like to have all of them generating the same percentage of your total income.

Value Balance

The value of a stock is the stock price multiplied by how many shares you own. It’s constantly fluctuating and can change in large swings from day-to-day based on the stock price.

While the main goal is creating income, the bigger your snowball, the faster it grows, the more snow it can produce. (I.E. The larger your portfolio value, the faster the portfolio grows, the more income it’ll produce.)

You want to make sure the value of one stock doesn’t get too large compared to the value of others in the portfolio.

How Many Stocks in Your Portfolio?

So how many companies should you own stock in? That’s up to you.

You could own a bit of every dividend aristocrat and be fine.

But, that becomes a bit hard to manage for some people.

The ideal number lies somewhere around 30.

A study of 32 randomly selected stocks reduced the risk of a portfolio by 95% compared to a portfolio of every stock on the New York Stock Exchange.

That’s a pretty stellar reduction in risk and a much more manageable portfolio.

Rule of 3s

With a portfolio of roughly 30 stocks, you should be targeting the Rule of 3s:

• 3 stocks from each sector
• 3% of your total income from each stock
• 3% of your total portfolio value in each stock

These are all rough estimates. Right now there aren’t even enough dividend aristocrats that are in the REIT sector to own three.  In this situation, try to keep the total value for each sector similar.

Things are going to change and fluctuate over time. That’s OK.

These numbers are more like the north star, there to help guide you in the right general direction.

A Rule of 3s portfolio isn’t going to give you the highest possible returns.  It’s going to ensure that you’ve got a low risk investment mix that provides safe passive income.

Global Aristocrats

The United States isn’t the only one with great companies that pay ever-increasing dividends.

Canada and other countries provide safe investments to grow your income snowball.

They’re worth considering to get even more diversification within your portfolio.

The Canadian Dividend All-Stars are a list of companies with five or more consecutive years of dividend increases. Download here.

The UK Dividend Champions are a list of companies with 25+ years of consecutive dividend increases.  They aren’t considered aristocrats because they aren’t part of the S&P 500.  Download here.

ETF Funds

If creating a portfolio of stocks doesn’t sound like fun, there are dividend aristocrat funds available.

You’ve got to be willing to pay a bit in fees, though. Even though the fees are small, they will hurt your return in the long run. Investing your money in a fund better than not investing at all, though. Put your money to work!

Funds make life easier because it means you only have to keep track of one thing, that fund. You can set up an automatic deposit and forget about.

Let someone else do the managing.

Some of these don’t follow the exact rules of a dividend aristocrat, but vary for one reason or another.

ProShares S&P 500 Dividend Aristocrats

ProShares is the only one that follows the strict guidelines for being an aristocrat.

It only holds companies that are part of the S&P 500 and have increased dividends for the last 25 years.

If it can’t find 40 stocks that meet the criteria, it will branch out to companies with a shorter dividend growth history

SPDR S&P Global Dividend ETF

Like I said, great dividend paying companies aren’t in the US. There are many global companies that can offer great passive income.

The S&P Global Dividend ETF isn’t a true dividend aristocrat fund, though.

While it looks for companies with rising dividends, it only requires 10 years of growing or stable dividend payments.

Which means the company could have maintained their payout without growing it and are still considered.

It also reduces the required length of time from 25 years to 10.

The fund selects the 100 highest paying dividend stocks that meet that criteria. No more than 20 can come from the same country.

ProShares S&P Midcap 400 Dividend Aristocrats

This fund is a slight variation on the traditional dividend aristocrat.

If you’re looking for some stocks with a little more growth opportunity and are hoping to see more value growth, this fund is for you.

Instead of looking to the S&P 500, this fund pulls from the S&P Midcap 400.

That’s group of smaller companies that are still in their growth phase. To build a fund, the guidelines get fudged.

Instead of looking to 25 years of dividend growth, this ETF only requires 15 years.

It’s also not pulling from the S&P 500.

SPDR S&P Dividend ETF

If you want the highest yielding dividend fund with a loose restriction on the dividend aristocrat guidelines, this is the choice.

The SPDR S&P Dividend ETF follows the S&P 1500 Composite Index for its pool of candidates. So instead of 500 companies, it has 1500 to select from. It then targets stocks with a dividend increase history of 20 years.

The fund tracks a yield-weighted list of 50 companies. Meaning they invest more money in stocks with higher yields and less in stocks with low yields.

Conclusion

There isn’t anything particularly amazing about the dividend aristocrats. A lot of them are pretty old and mundane.

Old and mundane is pretty great when it comes to investing.

Companies that you know are going to be around for the next 20 years are the types of companies you’re looking for.

While start-ups may grow faster and tech companies have cooler products, they can be risky.

You’re not looking for risk. You’re busy looking for income.

The post Dividend Aristocrats (The Complete Guide for 2017) appeared first on The Money Snowball.

Dividend Aristocrats are a special group of dividend paying stocks. You’ll find out who was added in 2018, who was dropped, what Aristocrat ETF funds are available, historical performance, building a portfolio and more!

Bonus Material: Free Dividend Portfolio Tracker Spreadsheet

You want to start dividend investing, but it’s hard to know where to begin.

There is roughly 3,000 dividend paying stocks in the United States alone.

That list doesn’t include all the global companies paying dividends.

So where does one start their search? With the Dividend Aristocrats.

You may be thinking “a fancy name like that must make them pretty special” and you’d be right.

The Dividend Aristocrats first have to be part of the S&P 500. That means they’re already one of the 500 largest companies in the US traded on the New York Stock Exchange.

Not only that, but the aristocrats must have increased their dividend payments every year for at least 25 years.

That narrows a list of 3,000+ stocks to a select group of 53 in 2018. The list changes every year as some get added and others fall off.

Through great and terrible markets, these dividend aristocrats have kept increasing their dividends.

Table of Contents

• List of Aristocrats
• Importance of Increasing Dividends
• Historical Performance
• Risk of Aristocrats
• Building a Portfolio
• Global Aristocrats
• ETF Funds

Click here to download your spreadsheet of Dividend Aristocrats

2018 Dividend Aristocrats

In this 2018 update, C.R. Bard was removed from the list of aristocrats.  They were acquired by another aristocrat, Becton-Dickinson Co.

We do have three new additions to the list: Praxair, Roper Technologies, and A.O Smith.

AbbVie

Ticker: ABBV

Archer-Daniels-Midland Co.

Ticker: ADM

Aflac

Ticker: AFL

Air Products & Chemicals

Ticker: APD

Franklin Resources

Ticker: BEN

Cardinal Health

Ticker: CAH

Colgate-Palmolive

Ticker: CL

Cintas Corp

Ticker: CTAS

Dover Corp

Ticker: DOV

Consolidated Edison

Ticker: ED

Federal Realty Investment Trust

Ticker: FRT

Genuine Parts

Ticker: GPC

Hormel Foods

Ticker: HRL

Johnson & Johnson

Ticker: JNJ

Coca-Cola

Ticker: KO

Lowe's Companies

Ticker: LOW

Medtronics

Ticker: MDT

3M

Ticker: MMM

Pepsi Co.

Ticker: PEP

Pentair

Ticker: PNR

Praxair

Ticker: PX

Sherwin-Williams

Ticker: SHW

Stanley Black & Decker

Ticker: SWK

AT&T

Ticker: T

T. Rowe Price Group

Ticker: TROW

Walgreens Boots Alliance

Ticker: WBA

Exxon Mobile

Ticker: XOM

Abbott Laboratories

Ticker: ABT

Automatic Data Processing

Ticker: ADP

A.O. Smith Corp

Ticker: AOS

Becton Dickinson & Co.

Ticker: BDX

Brown-Foreman Corporation

Ticker: BF.B

Cincinnati Financial Corp

Ticker: CINF

Clorox

Ticker: CLX

Chevron

Ticker: CVX

Ecolab Inc.

Ticker: ECL

Emerson Electric

Ticker: EMR

General Dynamics

Ticker: GD

W.W. Grainger

Ticker: GWW

Illinois Tool Works

Ticker: ITW

Kimberly-Clark

Ticker: KMB

Legget & Plat

Ticker: LEG

McDonald's

Ticker: MCD

McCormick & Company

Ticker: MKC

Nucor

Ticker: NUE

Procter & Gamble

Ticker: PG

PPG Industries

Ticker: PPG

Roper Technologies

Ticker: ROP

S&P Global Inc.

Ticker: SPGI

Sysco Corporation

Ticker: SYY

Target

Ticker: TGT

V.F. Corporation

Ticker: VFC

Walmart

Ticker: WMT

The Importance of Increasing Dividends

By increasing dividends, these companies are helping you fight inflation.

The long-term goal with dividend stock investing is to build an income snowball. With a large enough snowball, you can live off the passive income dividend payments.

A 3% annual inflation will eat away at the value of those dividends unless the company increases them with each year.

Think of it this way. Say you own a stock that pays you a $2 dividend. Not much but it allows you to buy a $2 candy bar.

Ten years down the road that $2 candy bar now costs you $2.70 because of inflation. That $2 dividend payment doesn’t buy what it used to.

This is why increasing dividend payments is so important. It helps support the relative value.

But there is also a hidden bonus. Stocks that increase their dividend payments also end up performing better.

Historical Performance

Increasing dividends are great, but you also want investments to do well.

The aristocrats have definitely performed well.

Over the years, the dividend aristocrats have outperformed the general market and not by a small amount.

Source: S&P Fact Sheet

Over a 10 year period, the dividend aristocrats have beat the S&P 500 Index by just under 2% annually.

To put that in perspective: say you invested $10,000 in an S&P 500 index and another $10,000 in a portfolio of aristocrats 10 years ago.

Your money in the S&P 500 would have grown to $24,669. Pretty great.

The portfolio of dividend aristocrats would have grown to $31,758. Pretty awesome!

You made an extra $7,000!

A 2% difference could be thousands of dollars in extra savings. Which also means more passive income.

Great performing stocks are…great. But great performing stocks with low volatility and low risk are stellar!

Yet again, the dividend aristocrats deliver.

Risk of Dividend Aristocrats

The S&P 500 takes some big hits during recessions (2000-2002, 2008) but the aristocrats hold strong.

They still drop, but it’s not as bad as the rest of the market.

You want to see some resiliency out of a portfolio during the bad times.

Dividend aristocrats do better than the rest of the market for two reasons:

1)  They’re paying cash

These companies have already decided to reward their stock holders with dividend payments. They can’t be a company in the start-up phase of business. Cash is their blood supply, so they can’t be a business that is blowing through it to stay afloat. They can’t be taking risky bets.

This means their stock is going to be less risky.

2) They’re going to be selective

Because they can’t be reckless with their cash, these companies are going to play it safe. They’re going to be selective with their business investments.

Being smart with cash allocation is a hallmark of aristocrat companies. They know part of that money is going to investors in the form of dividends so they have to make good decisions with what’s left.

That decision-making process means added value to the investor.

Now you know how awesome dividend aristocrats are, so let’s talk about how to get started investing in them.

Building a Dividend Aristocrat Portfolio

You know the beauty of dividend aristocrats. You’ve got the list of 2018 companies.

If their performance is so great shouldn’t you be able to start buying buying?

Diversification is the key. You’ve got to make sure you’re building a portfolio in such a way you don’t get burned.

Imagine you’ve bought 10 stocks for a total investment of $100.

Without paying attention to diversification, you could have $90 in one stock and $10 in the rest.

If that one stock with 90% of your money runs into problems and drops 20%, your portfolio is going to drop nearly 20% as well.

(1-0.2) * $90 = $72

That’s an $18 loss you took.

Instead, if you’d spread out that $100 evenly to 10 stocks, a 20% drop in one wouldn’t be as bad.

(1-0.2) * $10 = $8

Now it becomes a $2 loss.

There are two criteria you want to watch out for: sector balance and value balance.

Click here to download your spreadsheet of Dividend Aristocrats

Sector Balance

Companies fall into a series of broad sectors. Whatever industry they serve places them in a business sector.

They are:

• Consumer Cyclical
• Industrial
• Healthcare
• Consumer Defensive
• Technology
• Financial
• Basic Material
• Utility
• Energy
• Communications
• REITs

Often times the stocks in each sector will move together. This isn’t an exact science, but more a rule of thumb.

It’s best not to get too invested in one specific sector for the same reason as the example above.

I’d say the max that you should be invested in any one sector is 20% of your portfolio.

Value Balance

The value of a stock is the stock price multiplied by how many shares you own. It’s constantly fluctuating and can change in large swings from day-to-day based on the stock price.

That’s why we want to buy stocks when they have the best value potential.  The dividend is one part of our return with value being the second.

Value growth makes the snowball bigger.

While the main goal is creating income, the bigger your snowball gets, the faster it grows, the more snow it can produce.  The larger your portfolio value, the faster the portfolio grows, the more income it’ll produce.

You want to make sure the value of one stock doesn’t get too large compared to the value of others in the portfolio.

Rule of thumb here is to not have more than 5% of your portfolio invested in any one stock.

How Many Stocks to Own in Your Portfolio

So how many companies should you own stock in? That’s up to you.

You could own a bit of every dividend aristocrat and be fine.

But, that becomes a bit hard to manage for some people.

The ideal number lies somewhere around 30.

A study of 32 randomly selected stocks reduced the risk of a portfolio by 95% compared to a portfolio of every stock on the New York Stock Exchange.

That’s a pretty stellar reduction in risk and a much more manageable portfolio.

Global Dividend Aristocrats

The United States isn’t the only one with great companies that pay ever-increasing dividends.

Canada and other countries provide safe investments to grow your income snowball.

They’re worth considering to get even more diversification within your portfolio.

The Canadian Dividend All-Stars are a list of companies with five or more consecutive years of dividend increases. Download here.

The UK Dividend Champions are a list of companies with 25+ years of consecutive dividend increases.  They aren’t considered aristocrats because they aren’t part of the S&P 500.  Download here.

ETF Funds

If creating a portfolio of stocks doesn’t sound like fun, there are dividend aristocrat funds available.

You’ve got to be willing to pay a bit in fees, though. Even though the fees are small, they will hurt your return in the long run. Investing your money in a fund better than not investing at all, though. Put your money to work!

Funds make life easier because it means you only have to keep track of one thing, that fund. You can set up an automatic deposit and forget about.

Let someone else do the managing.

Some of these don’t follow the exact rules of a dividend aristocrat, but vary for one reason or another.

• ProShares S&P 500 Dividend Aristocrats (NOBL)
• SPDR S&P Global Dividend ETF (WDIV)
• ProShares S&P MidCap 400 Dividend Aristocrats (REGL)
• SPDR S&P Dividend ETF (SDY)

ProShares S&P 500 Dividend Aristocrats (NOBL)

Source: NOBL Fact Sheet

ProShares is the only one that follows the strict guidelines for being an aristocrat.

It only holds companies that are part of the S&P 500 and have increased dividends for the last 25 years.

If it can’t find 40 stocks that meet the criteria, it will branch out to companies with a shorter dividend growth history

SPDR S&P Global Dividend ETF (WDIV)

Source: WDIV Fact Sheet

Like I said, great dividend paying companies aren’t in the US. There are many global companies that can offer great passive income.

The S&P Global Dividend ETF isn’t a true dividend aristocrat fund, though.

While it looks for companies with rising dividends, it only requires 10 years of growing or stable dividend payments.

Which means the company could have maintained their payout without growing it and are still considered.

It also reduces the required length of time from 25 years to 10.

The fund selects the 100 highest paying dividend stocks that meet that criteria. No more than 20 can come from the same country.

ProShares S&P MidCap 400 Dividend Aristocrats (REGL)

Source: REGL Fact Sheet

This fund is a slight variation on the traditional dividend aristocrat.

If you’re looking for some stocks with a little more growth opportunity and are hoping to see more value growth, this fund is for you.

Instead of looking to the S&P 500, this fund pulls from the S&P Midcap 400.

That’s group of smaller companies that are still in their growth phase. To build a fund, the guidelines get fudged.

Instead of looking to 25 years of dividend growth, this ETF only requires 15 years.

It’s also not pulling from the S&P 500.

SPDR S&P Dividend ETF (SDY)

Source: SDY Fact Sheet

If you want the highest yielding dividend fund with a loose restriction on the dividend aristocrat guidelines, this is the choice.

The SPDR S&P Dividend ETF follows the S&P 1500 Composite Index for its pool of candidates. So instead of 500 companies, it has 1500 to select from. It then targets stocks with a dividend increase history of 20 years.

The fund tracks a yield-weighted list of 50 companies. Meaning they invest more money in stocks with higher yields and less in stocks with low yields.

The post Dividend Aristocrats (The Complete Guide for 2018) appeared first on The Money Snowball.