by Hammachi
(Minneapolis, USA)
Originally, I bought a local over-the-counter stock that didn't pay a dividend. That taught me a valuable lesson. "Buy a stock that reliably pays a good dividend and it will pay for itself." In 1979 I bought an electric utility stock which had a 10% dividend yield. I used the dividends to buy more stock in the company. That stock proved to be a winner as they have never cut their dividend and usually increased it. Now, that I'm retired, I get nice dividend checks from them every quarter.
I have some money in mutual funds at Fidelity Investments. I like their "balanced fund" which has stocks and bonds. Recently, I have started putting some of the money at Fidelity into corporate bonds. My accounts at Fidelity have always been IRA accounts. What mutual fund advisors should tell their clients is to have equal amounts in stocks and bonds.
I'm still trying to increase my dividend income after retirement. I bought another electric utility stock in 2006 and traded some other stocks for more of it in 2007, so far so good on that stock. This year I sold all of another electric utility stock that I bought in 1983. and bought 3 well-known dividend stocks to replace it. Two of the stocks that I bought have already increased their dividend this year. The stock I sold was for more than I paid and had already paid for itself with dividends.
Dividends are the key to successful investing. Good dividend stocks make money regardless of what the market does.
Editor's Comment: Thank you Hammachi! if ever proof were needed that long-term investment can prove to be profitable, this could well be it!
We agree that a reliable dividend can be a wonder for the small investor. And in addition, you seem to have bought defensive stocks that provide services that people will continue to need and consume long into the future. There is a lesson there too.
The utilities are well known for being reliable payers of dividends and it seems that you have been doing just the right thing. Gradually growing your holding over time with dividend reinvestment.
Congratulations and thank you again for such wise advice.