hi everybody we're actually having a mini heat wave here in Canada we are unseasonably so
we're having a great day so
what are we going to talk about today Tina how about the best guide to dividend investing
sounds good so we're going to show you five top tips to help you save and get passive income from
dividend stocks and if you are new to our channel please subscribe because we really appreciate it
and it does help our channel doesn't it and it greatly encourages us to know that people
are enjoying what we do and that way you won't miss out on any future videos that we put up
so let's get straight into it why invest in dividend stocks that's a biggie because interest
rates are at an all-time low they really are and if if we look at what our parents were getting
when they were in retirement they were able to get nearly 10 percent back on their cash deposits
at the local bank those days are long gone, yeah so we wish, in today's market you can only
get on a regular savings account at a big bank in Canada half a percent in interest if you go to the
new internet-based banks that some insurance companies are running or credit unions you can
the maximum is 1.5 yeah that's not enough to live on no it isn't is it
but overall Norm the stock market is healthy isn't it that's one of the reasons to invest in dividend
stocks at the moment the the stock markets have been on a tear for quite a few years okay COVID19
they sold off but the good quality stocks the ones that we're suggesting that you buy they have come
back relatively close to their previous valuations before March of this year which is great because
as you know like a lot of people Norm think that the stock market is risky don't they that's the
popular conception really I think our parents generation felt that and our parents didn't
invest in the stock market no they didn't did they but it's not it's not as risky as you think,
everything about life is at risk at some point but that's true but the stock market you can reduce
the risks by making smart decisions and that's what we're really trying to help you with today
so if you had a whole pile of cash or you wanted to start saving to have some cash where would you
put your money normally what would be the popular you'd take your money down and put it in the bank
you would indeed yeah in like a savings account or something so you'd be getting half percent as
we said earlier on but there is one little catch to a bank account they're not free are they no
they're not they actually charge you don't they and they even charge old people like us seniors on
fixed incomes and even with senior rates we still have to pay don't we Norm we do so what would be
an average fee in Canada for bank rates do you think I think a lot of them are around about
$20 a month I think our reduced one is like $12 but I think the majority of them are around $20
so if we use $20 just because it's a more simple way of doing math how much money in capital would
you need to invest in that bank to just earn enough interest to pay that monthly bank fee,
you would need fifty thousand dollars holy moly just to cover the service fees of what your
charged in a year so you're gonna take some of the capital that you want to live on in retirement and
just put $50,000 aside that you're never going to use just to pay the fees which is crazy
isn't it so now that we've said why invest what to invest in oh like this we like to buy safe stocks
and safe what we mean is high quality companies that are managed well, yes and in our case we
like the banks don't we we do so you knew we were going to come back to the banks didn't you,
yes we like banks because remember if you put your money in you didn't get very much interest but if
you buy the banks stock you get a lot higher interest on your dividends don't you and the
other thing about it is if you trust the banks so much to give them your capital to put it
into a high interest savings account then why wouldn't you buy the bank stocks if you had that
much faith in the bank, yeah that's very true isn't it but you're going to get five percent
which is a lot better yeah and one thing we should say is we like the banks and that you should avoid
the high interest dividends sort of over the six percent you can get tempted can't you Norm to go
for these high ones and we have done that yes, we have been we have been burnt on a couple haven't
we and the problem Tina with a lot of the high percent dividend is when when the stock market
goes down there's a great temptation for those companies to suspend dividends or cut dividends
yeah which isn't good and the first thing that happens when a company either cuts a dividend
either reducing it or cutting it out altogether is the stock price absolutely tanks so you lose on
both ways the stock price goes down and you lose on the dividends too so don't get greedy don't get
greedy stick with the stable banks with a good rate so we do like the banks because they're
all paying around five percent some are paying five and a half percent which is enough to live
on that's very true don't go greedy and go after those 18 percent dividends because they won't last
no be very short lived wouldn't it so where do you find the winners to invest in Tina well there
are the dividends you can go to the Aristocrat list so we've we've talked about that before
the the U.S. and Canada both have lists of Aristocrat stocks they basically are the ones who
have increased their dividends over a consistent period of time but that's not the only list to go
for so we'll come back to the banks because we're using that as an example, so we've invested in
the stock of the Bank of Montreal and they've been paying a dividend since the early 1800s
so that kind of gives us a good feeling that they're pretty rock solid aren't they and all the
Canadian banks have been paying dividends since the 1800s the Bank of Montreal was the first one
and the Royal Bank of Canada was the the last one to come in with dividend payments
in the late 1800s so you're on a winner with those yeah and there are lists just search for
them but but stick with the quality well-managed companies that are household names we avoid
a lot of the energy companies because of the volatility of oil prices and what have you,
so aristocrat lists to find potential stocks to invest in so one thing Norm
is I'm sure people are wondering is who should invest who are the people that should be buying
the dividend stocks, well you could blankly say everybody yeah but it's good for retirees
for one reason because we need income like us so we have it and it produces around five percent
monthly for us but for those who are striving for early retirement like we did in our 50s those in
their 40s and 50s it's an ideal vehicle to invest in dividend stocks are slightly more stable
than growth stocks so at the moment COVID19 depressed the stock market prices came down
not as much as you would initially think but when you're getting paid a dividend they're paying you
to wait for the stock price to come back this is true you don't want to sell the dividend stock
because it's coming up with my favorite story is chopping the tree down instead of eating the
apples so it doesn't matter that your dividend stock has lost 10 or 15 percent of its value
because they're still paying you your dividend which is great so you win all round don't you,
you do and and those in the 40 to 50 year old age group or even younger the more entrepreneurial
young people should maybe look at dividend stocks that maybe offer a D.R.I.P. a Dividend
Reinvestment Plan where instead of them paying you the dividend in cash they pay you in stock of
so you're building your stock which is another great idea isn't it to get more stocks, it really
is so if you're looking to build that capital dividend reinvestment plan is another useful way
because you don't need the income because you're probably already employed and have enough. So
number five Outliving Your Money and you know what that is something that a lot of people worry about
isn't it, we did we were terrified that we might in retirement run out of money so we actually got
a calculator out and worked out how much we would need if we lived till we were 75 or 80 calculated
it all didn't we, even to 90 for Tina as she's going to outlive me, not necessarily Norm but
that is something people are worried about, are we going to run out of money, are we going to
outlive it and really you're not are you so so when you combine the government pensions that
you're going to get and we're looking at around $20,000 in government money yeah that we that we
get per year just spend the dividends you don't need to dip into your capital unless there's
something that you particularly really want, yeah but with the $20,000 with the 5 percent dividends
we don't even spend all the dividends because we don't need to so that's staying as investment
capital so it is surprising isn't it just as you get older you don't need as much, you don't
and and this whole thing about living frugally becomes a natural lifestyle it does doesn't it
always watching to save the pennies but the big chunk of the money is still there and we just
as Norm says we're eating the apples off the trees yeah not chopping the trees down
and there is a theory that if you don't withdraw more than four percent of your
portfolio per year you won't outlive your money it will outlive you, you won't run out of money in
retirement so if you are concerned about having a legacy and leaving it behind for your family
that will take care of that won't it, it is and so this comes back to the whole point of this
maybe you've sold your house and you want to invest it, you want to pay for your
retirement maybe you don't have a pension then you should basically think about dividend stocks
getting five percent and you should have enough to live on which is great isn't it, it is so
we hope that you've enjoyed our video we do yeah and we hope that everybody is
staying safe staying well avoiding this virus just enjoying life.
you