- So last month I received my biggest dividend payment ever
from one of the stocks that I own.
And that got me thinking,
is it possible to live off of dividend income?
So in this video, I'm going to be sharing my thoughts
on that concept as well as exactly how much money
you would need right now in 2021
to theoretically live off of dividends.
Then at the end, we're going to be doing a full update
on my M1 Finance portfolio, so stay tuned.
So I ended up receiving a dividend
in the amount of $1,198.04 and in November of 2021.
And this is from a stock that I own called
Global Partners trading under the symbol GLP.
Essentially, this is a limited partnership
that's involved in the energy business,
as well as the operation of over 1000
different convenience stores across the Northeast.
So this dividend earned is essentially my portion
of the profits of this overall business.
I initially invested about $50,000 into this stock
and at the current price it's outright now,
the dividend yield is sitting at roughly 10%.
And since your average dividend is usually three to 5%,
that is substantially higher than you typically see.
So what that means is based on the current share price
right now, I could expect a 10% yield
on my investment in the form of dividends.
So if it was 50,000, for example,
that means $5,000 every single year in dividends
paid out on a quarterly basis.
Now that's certainly an impressive amount of money
for dividends, but nobody can really live off of $5,000.
So the question becomes,
how much money would you need to invest
in order to live off of that dividend income?
So according to NerdWallet, the average expenses
for a single person is around $3,189.
So we're going to be basing our calculations
off of that figure.
Not to mention these are after tax expenses,
so we want to make sure that you have enough pretax income
to cover your taxes and then all of your expenses.
So adding 25% to that figure to account for taxes,
and then looking at it over the course of an entire year,
the average single person is going to need roughly $45,921
per year just to survive.
So not accounting for inflation, which is rampant right now,
it's reasonable to say that the average single person
out there would need about $46,000 per year
in dividend income in order to survive in 2021.
So the question becomes, how much do you need to invest
in order to earn $46,000 of dividends every single year?
We're gonna cover a few different examples,
but let's start here with theoretically,
solely investing in this limited partnership
that I've invested in called Global Partners.
Also guys, real quick, I'm not a financial advisor.
This is not any sort of financial advice,
and you should always do your own due diligence and research
above and beyond this video before investing.
Well, it doesn't take a math whiz to tell you that
at the current yield, which is roughly 10%,
you would need to invest about $460,000
into this limited partnership to earn about 46,000
per year in dividends annually.
Essentially, you would then earn a quarterly dividend
of around $11,500
based on that initial $460,000 investment.
So you would definitely need to budget your money very well
because rather than earning a paycheck,
which is 26 or 52 times a year,
you would only be getting paid four times per year.
However, putting that much money into one single stock
or investment is really not a good idea.
Let me explain why.
Although the yield of this limited partnership is great,
it could change at any point in time.
And this is based on economic conditions
or in the case of their business, it could be related to
their convenience store sales,
inflation eating away at profit margins,
higher fuel costs, et cetera, et cetera.
So there's an old saying out there called
don't put all of your eggs in one basket.
And if you put all of your money into GLP
or any stock out there, you're essentially putting
all of your eggs in one single basket.
If that basket breaks or has an issue, you are SOL.
In fact, those who live off of dividend income
very rarely do this with single stock ownership.
Instead, what they're doing is investing in a fund
which owns dozens, if not hundreds,
of different dividend paying stocks.
The benefit here is that all of your eggs
are not in one basket, you're spread out and diversified
across many different companies.
So if one of those individual companies has some trouble
and they're unable to pay dividends
or they have to cut them, it's not going to affect you
nearly as much as if that was the only stock
that you were investing in.
However, because you're so well diversified
and spread out across so many companies,
the yield is going to be significantly lower than the 10%
that we're seeing from Global Partners.
Essentially, that's the trade off here with diversification
is that since your money's spread out all over place,
the yield is going to be lower.
Now, one of the most popular high yield ETFs out there
is the Vanguard high dividend yield ETF,
trading under the symbol VYM.
So let's take a look at that one now.
Currently this fund pays a yield of 2.72%,
which is actually pretty decent.
Believe it or not, it might sound bad,
but that's a pretty solid yield to be earning
from an index fund.
At times when the markets were at all time highs,
yields were sometimes below even 2%.
With this particular fund here, you own a small piece
of 410 different high dividend yield paying stocks.
This includes companies like Johnson & Johnson,
Home Depot, Exxon Mobil and more.
So if you were looking to derive $46,000
of annual dividend income from this particular ETF,
you would need a lot more invested
rather than compared to the example of solely investing
in that other limited partnership, which as we said,
isn't the best idea because you have no diversification.
So how much do you need?
Well, based on the current share price
and the current dividend yield,
you would need to invest $1.69 million into VYM
in order to earn $46,000 per year in annual dividends.
So obviously guys, living off of dividends
is really no easy feat.
It takes years, if not, decades of living below your means
and investing to build up enough money to spit off
enough dividends to then live off of those dividends.
Frankly, there's probably better or faster methods out there
for building revenue or income streams
that could replace the money from your job.
However, I would say that dividend income, in my opinion,
is one of the only forms of truly passive income out there,
where you're literally doing nothing
and earning money in the process.
Not to mention, with inflation at a 30 year high,
this idea of living off of dividends
is sort of going out of the window for most people,
or those who are, are maybe having a harsh wake-up call
that, "Hey, as prices are going up substantially,
"I'm not making enough off of these dividends
"to continue supporting my lifestyle."
In my opinion, I think a better strategy is to have the goal
of supplementing your income with dividends,
that way you can do the work that you enjoy.
I have taken long periods of time off of work,
where I've done next to nothing.
And I know it sounds like a really cool idea
when you've never done it, but I'm telling you guys,
when you actually sit down and do nothing or try to retire,
it's not that great.
One or two days go by and you're bored out of your mind.
And you're like, "This is literally terrible."
So this idea of sitting around and collecting dividends
and doing nothing, really isn't that great in my opinion,
but supplementing your income
and allowing you to do the work you want to,
I think is a much better goal.
So that's basically my goal here with my investments
and with GLP, is to eventually build up
a large enough position that I'm reinvesting those dividends
and pretty much just letting that money sit there
and then years down the road,
if I maybe don't wanna be working as hard as I am right now,
I could simply derive dividend income from my portfolio.
But anyways, guys, that being said,
let's now jump into M1 Finance portfolio
for a quick update.
Okay guys, so here we are inside of M1 Finance portfolio,
which currently has a value of just under $100,000.
Now this is a portfolio where I invested heavily
after the global pandemic in 2000.
And then as you can see here,
once that portfolio hit somewhere over $200,000,
I ended up taking a lot of this money off of the table,
out of this portfolio in order to invest elsewhere,
pay off debt and do a couple of different things.
So at this point in time,
I'm calling this my defensive/speculative growth portfolio,
which is kind of a strange mix here,
but it's essentially what we have in my opinion.
So in this portfolio, the largest position
is that Global Partners as we had mentioned.
After that, I have a very sizable position
in a company called Genius Brands,
which I own across multiple different portfolios.
I've actually invested over a hundred grand into this stock.
And if you're wondering why I have such a long beard,
it's because I agreed that I would not be shaving
until that stock hits $5 per share.
So that is the number two position in this portfolio.
Then I own shares of Dave & Buster's.
And lastly, I own a few shares here of Verizon.
So let's jump over to the holdings
and see what the performance is.
And right now the portfolio is down about 18.6%
across all of these investments.
Right now, guys, pretty much everybody has some red
in their portfolio, or you might be like me,
and your entire portfolio is in the red.
But you have to keep in mind that investing
is a long-term game here, and you can't get focused on
the short term corrections in the market.
That's also why I love investing in dividend stocks,
because even though my portfolio is down right now,
if we jump over to the activity tab,
you can see here on November 12th,
where I earned this mega huge dividend
from Global Partners of almost $1,200.
So it's awesome to be able to get paid
in two different ways from your stocks.
That way, if the price goes down,
these dividends sort of bail you out
and get you back to a price where you started.
Now, last month, there wasn't really any major news
for Global Partners.
Dave & Buster's, nothing to speak of either
other than the fact that they were involved
in this, basically COVID variant driven sell off
because they are obviously a entertainment venue.
People are fearful of further lockdowns,
so this stock had a pretty bad sell off this week
with this new Omicron variant.
As far as Verizon goes, as I've mentioned a couple of times,
I'm pretty much just waiting for that position
to roll over into the green,
and then I'm going to sell it off
and probably put that money elsewhere,
may be crypto or something like that.
Having a small $3,000 position,
in my opinion, that's not really doing too much for me,
basically, just waiting for that to turn green.
However, there was a lot of news last month
surrounding Genius Brands.
So we're going to go ahead and cover that now.
So we ended up getting two big pieces of information
from Genius Brands since we last talked.
Number one is this acquisition
of a smaller animation company called WOW! Unlimited Media.
And number two is another blowout quarterly earnings report
for the third quarter of 2021.
As you can see here, Genius Brands announces 585%
year over year increase in revenue
for the third quarter of 2021.
Also let's just scroll down to these highlights here.
We're not gonna cover all of them,
but I am going to cherry pick a couple of details
that do seem relevant.
So we can see here that the revenue came in at $1.9 million
in quarter three of '21 versus just 300,000
for the same period last year.
We can also see here, this was one
of the most important pieces of information in my opinion,
is it's all about getting people to download
that free Kartoon Channel app.
And yes, that's Kartoon Channel with a K.
And what we can see right here is that these shows
that they've been releasing on YouTube
and different distribution platforms, Pluto TV, et cetera,
are very effective at driving app installs.
Kartoon Channel drove a 512%
sequential increase in application installs
just from quarter two of this year to quarter three.
We're not even talking about the quarter a year ago,
because that would be an even bigger number.
And I'm not even sure if the app was available
at this point in time.
What we're talking about here is the difference
between quarter two of '21, which is April, May, June,
versus this quarter directly after that,
which is July, August, September.
From April, May, June to July, August, September,
512% increase in app installs.
That is phenomenal in my opinion,
and should lead to more people using the app,
watching the content, more ad impressions,
and more money for Kartoon Channel and Genius Brands.
Now we're not gonna go into too much detail here
with WOW! Unlimited Media.
This is basically an animation company
that Genius Brands is acquiring,
and it's going to do a lot of things for them.
Number one, it brings animation in-house for them,
which is gonna cut down on costs,
but they're also moving their animation
from China over to Canada,
which is going to have other benefits as well
in terms of less taxes and tariffs, et cetera.
So there's going to be a lot of benefits here.
And also, WOW! Unlimited Media
is a really solid company as well with positive net income.
One of the things that Genius Brands,
pretty much the only thing actually that it's missing
is strong revenue.
And this acquisition in my opinion,
is very strategic because it brings positive net income
and substantially more revenue
to the table for Genius Brands.
So once this deal officially closes,
which it most likely will,
and we do see those numbers update,
the 12 trailing months revenue for Genius Brands
is going to absolutely skyrocket.
And in my opinion, that's going to bring
a completely different type of investor to the table
who is interested in streaming or smaller cap stocks
or children's entertainment stocks,
who may have avoided Genius Brands in the past
due to the very small amount of revenue,
but now may consider consider it based on
this much higher revenue figure.
We also saw here that WOW! Unlimited Media
announces record quarterly EBITDA
and strong revenue for the third quarter.
So this company just seems to be doing fantastic as well.
Lastly, guys, if you're looking to learn more
about M1 Finance or how to get started with investing,
I do have that completely free 30 minute training
linked up down in the description below.
And there's also an affiliate link for M1 Finance
if you decide that you want to sign up.
But thank you guys so much for tuning into this update.
I hope you enjoyed it.
And as always, I hope to see you in the next video.