Building massive amounts of passive income for from investments is once you understand the snowball effect and the magic of compounding interest. Dividend investing is how Warren Buffet build a multi-billion dollar portfolio. The Warren Buffett investment strategy discussed in this video will show you how to make passive income with dividend growth stocks. Using the Warren Buffett advice I learned 15 years ago, you can build a dividend stock portfolio that generates retirement income with dividend investing. The best dividend stocks to buy now are those dividend stocks that generate smart passive income utilizing a consistent and growing dividend income strategy. In the last Warren Buffett speech I listened to, I learned the Warren Buffet tips for how to generate dividend income for retirement. Dividend growth investing is the best type of retirement planning at 50 and retirement planning at 60 you can do. You don’t need a retirement calculator to figure this out. Financial planning is easy once you learn the best dividend stocks to buy now, and how to do dividend investing for beginners. Understanding dividend income investing will lead you to the top dividend stocks 2024 that will generate passive income, as recommended in the most recent Warren Buffett interview.
Everybody would love to have a huge dividend portfolio, one that provides cash day after day, month after month, and year after year. A portfolio of companies that produces so much income that you can live off of it. One that completely replaces your active income and allows you the freedom to do the things that you really want to do. Dividends, after all, are passive income. It’s money that you make without lifting a finger. Dividend investing is not sexy. In fact, it’s quite boring. But history has shown us that the most boring companies and the most boring investments are the ones that far outperform, far outperforming even the most popular growth stocks and mega-cap tech stocks over a long period of time. You do have to do the initial work up front. You have to find the stocks to invest in. But once you’ve done that, you are now generating passive income that you can live off of. This is my personal goal to get to the point where I have so much dividend, passive income that I don’t have to work anymore, where working is an opportunity, not a requirement where I can retire if I want to, and not just retire but retire comfortably where my income actually goes up over time and my lifestyle gets better over time rather than worse. I don’t just want my dividends to pay for my retirement, I want my dividends to grow and more importantly, beat the rate of inflation. So I’m going to show you how to build more passive income with dividend investing, how to beat the overall market, how to find the best stocks to invest in, and how to manage your dividend portfolio. I’m going to show you the lessons that I have personally learned over the past 25 years of investing. I’m going to show you the biggest mistakes that I think dividend investors are making, and I’m going to show you what I think dividend investors should focus on so that they can build their portfolios at a very rapid pace and reach their goals much sooner. For those of you who are new to this channel, my name is Scott Curry. I’m a former Merrill Lynch and Morgan Stanley investment banker, and I’ve been investing for the past 25 years and for the past 25 years, building a dividend portfolio that would generate passive income that I could live off of has always been my goal. But along the way, I’ve made a lot of mistakes that have really hurt my growth and really slowed down my ability to get there. So in this video, I’m going to share with you the mistakes that I made so that you don’t make those same mistakes and hopefully you can reach your goals. A lot faster than I’ve reached mine. When I was younger, I chased after the fast money. I went after those high growth stocks that I thought would generate up 100, 200, 300% returns in a single year. But as I got older, I learned that was not the best idea. As I got older and more experienced, I learned that Warren Buffett was actually right. Building a portfolio slowly over time, by focusing on long term growth in high dividend yielding stocks was actually the best way to build a portfolio. It’s the way that keeps your money growing over time. Rather than seeing these huge increases in your portfolio one year, followed by huge drops in your portfolio the next year. As I learned the hard way. While I might miss out on some of those 100 or 200% bangers, I also missed out on their eventual 50% declines. It took me a long time to learn this, but after getting beat up in 2001 and again in 2008, I learned that investing in high quality dividend stocks actually outperforms. Trying to invest in high growth, speculative stocks. Today is my birthday. I turned 45 years old today, and as I get older and start to approach retirement, my focus goes away from trying to find these really fun, high growth stocks. And I start focusing more on long term passive income because ultimately I would like to retire one day. And most importantly, I would actually like to enjoy my retirement with a huge amount of income coming in every month, rather than struggling on Social Security and, well, no pension. The financial freedom that comes from generating huge amounts of passive income reduces a lot of stress. Contrary to popular belief, money does buy happiness. So let me show you everything I’ve learned over the past 25 years how to build a massive dividend portfolio quickly so that you can also reach your financial goals and achieve that financial freedom for yourself. So let’s start with the basics. There are three basic steps to building a dividend portfolio and to compounding that growth so that you’re able to achieve your goals very quickly. And the first step is to buy stocks that pay dividends. Of course, you’ll need an active income in order to do this. You can’t build a passive income dividend portfolio without having active income to invest in dividend stocks So you’ll need to have some kind of stable job, or at least some form of stable income that you can invest into a dividend stock portfolio so that you can build passive income for the future. Of course, you’ll also need a budget to help ensure that you’re actually saving for your retirement and not just spending all of your money now. But the sooner that you’re able to get started, and the more frequently you’re able to invest, the faster you’re going to build a massive amount of passive income, and the sooner you’ll reach your goals. There are also ways of using options in your dividend portfolio to generate much higher returns than just investing in dividend stocks alone. Experienced traders can also consider a strategy that has the potential to generate income with dividend stocks, and covered calls with the Moo Moo trading app. Moo Moo is a tool that I recommend for stock researching and trading. It is available to users in the US and Australia, and it’s also the sponsor of this video. You can easily identify high yielding dividend stocks with Moo Moo Stock Screener. You can filter by dividend yield, dividend amount, and market capitalization. To find stocks that fit your criteria for your portfolio, you can further research stocks by looking at each stock’s dividend history and annual yield growth. This allows you to quickly identify high yielding dividend stocks with historically consistent dividend payments. Just keep in mind that future dividends are not guaranteed, so you will have to manage your portfolio from time to time. Once you find the dividend stocks for your portfolio, you could potentially generate more income with covered calls. And Moo Moo has a special feature that allows you to place a one click covered call and stock order at the same time. You can view profit and loss charts to see our potential returns with any change in the stock’s price movement and this intuitive app function simplifies the entire investment process and provides a clear visualization of theoretical returns or losses. Best of all, when you build your portfolio with Moo Moo Moo, you’ll pay zero commissions on stocks, options, and ETFs. That’s zero contract fees and zero platform fees on stocks, options and ETFs. Even better, Moo Moo is currently offering 8.1% APY for a limited time on your Uninvested cash. You can deposit and withdraw that money at any time, even before you’ve started investing. You can earn interest while you plan your next moves. The 3% APY booster can apply for up to $20,000 of Uninvested cash for the first three months after opening and depositing your account, and 5.1% APY after that. Plus, when you open an account using my link in the description below, you’ll get up to 15 free stocks. When you deposit at least $1,000. Just make sure to read the terms and conditions that apply, so use my link in the description below to open and fund your account with Moo Moo right now. Get some free stocks and enjoy the benefits of this research tool. Thanks again to Moo Moo for sponsoring this video. The second step to building a massive dividend portfolio is to reinvest your dividends. When a company pays you dividends, use that money to reinvest into other companies that have the best opportunities at the current time to build massive amounts of dividend in the future. The highest potential return opportunities are going to change over time. So whenever you get dividends in your portfolio, you’re going to have to look through your portfolio, look at all the different companies in your portfolio, and then select which company to invest in at that time. Don’t just use an automated drip program where you reinvest dividends into the same stock. You want to take those dividends and you want to invest them into the best stock at the time, meaning that if one of the stocks in your portfolio has gone down in price and thus is returning a higher dividend yield, you want to invest in that stock and you want to stay away, or at least wait to invest more money into the stocks that have run up and now have very low dividend yields. The way I personally do this is basically buying the dip in my portfolio. Sometimes I’ll get dividend yields and I just won’t invest that money at all. I’ll just keep it in cash. Wait for prices to come down a little bit. Sometimes I’ll have a particular stock in my portfolio that has fallen over the previous couple of weeks, and I’ll throw some money into that. Sometimes I’ll have stocks in my portfolio that just had a massive run up, and I will wait to invest money into those companies until I can get them at a lower price and get a little bit better return on my investment. As an example, Mastercard ticker Maa is only paying a dividend yield of 0.6% right now, but VTI, ticker Vici, is paying a dividend yield of 5.4%. So I would reinvest my dividends into VTI right now and wait to invest more money into stocks that have run up a lot recently, such as Mastercard, Microsoft and Apple. Finally, step three is to invest in companies that are growing their dividend over time. Now, this changes the criteria for which stocks you invest in. You don’t just want to invest in stocks that pay a dividend. You want to invest in stocks that pay a growing dividend and more importantly, one there. That dividend is growing at a rate that’s faster than the rate of inflation. Take Verizon ticker VZ as an example. This stock pays a 6.4% dividend yield. Now that seems really good. And the dividend is in fact growing over time. But it’s not growing fast enough to beat the rate of inflation Further. If you look at Verizon’s stock price over the past eight years, the stock hasn’t really gone up at all. It’s just traded flat. The overall stock market has risen by 10% per year, and while Verizon does pay a 6.4% dividend yield, that’s all you’re getting. You’re not getting any increase in the stock price. So while the overall market has gone up by 10% per year, Verizon has only given investors the 6.4% dividend yield. Because of that, Verizon isn’t even beating the overall market. So this is a value trap. The 6.4% dividend yield looks juicy, but in reality, you would have been better off just investing in the S&P 500 index in an ETF like Spy, which would have gone up by 10% per year, instead of the 6.4% that Verizon is giving you on the other hand, take a look at a stock like Microsoft. The dividend yield is only 0.7%, but the stock is up 220% over the past five years. Texas Roadhouse is another example. The dividend yield is only 1.4%, but the stock is up 215% over the past five years. Further, if you look at the dividend growth of both of these stocks over the past five years, Microsoft dividend growth is 10.6% per year over the past five years, while Texas Roadhouse’s dividend growth is a massive 17% per year over the past five years. So not only are you getting the stock price appreciation, you’re also getting a massive increase in the dividends. If you were to invest in a stock like Verizon, you would be getting a larger 6.4% dividend yield, but that would be all over five years. That would have netted you a measly 36% growth in your portfolio But if you had invested in Texas Roadhouse instead, you would have seen a 222% growth in your portfolio. So the key is to not only pick stocks that are paying dividends, but to also pick stocks that are growing those dividends at a rate that beats the overall market. And those are the three basic steps to building a dividend portfolio. You buy stocks that pay a dividend. You reinvest those dividends into other stocks that are paying dividends, and that grows the amount of dividends that you get over time. Most importantly, you don’t just invest in companies that pay dividends, you invest in companies that grow their dividends. And that has a compounding effect that allows you to grow your portfolio at a rate that beats the overall stock market. All of these three steps combined are powerful. It’s almost magical in the way that these have a compounding effect to grow your portfolio at an insanely fast pace. At the end of this video, I’m going to show you just how fast your dividend portfolio can grow, with a very small amount invested every single year. And while those three steps seem simple enough, we do have to cover some of the mistakes that I see a lot of investors making. Because even though those three steps are pretty simple, it’s very easy to fall into some value traps that will hurt your growth over time. And understand that as I’m talking about these mistakes that dividend investors make that hurt their growth in their portfolios. But I’m really talking about here are the mistakes that I made. These are mistakes that I myself made all the way through about 2010, and that I was focused on the wrong things. I didn’t really know what I was supposed to be investing in, but these are all of the mistakes that I have since learned from and corrected. And my hope is that by sharing these mistakes that I made with you, you can avoid the same mistakes and you can see massive growth in your portfolio, and you can reach your goals a lot faster than I’ve been able to. The number one biggest mistake that I see dividend investors making is focusing on the starting dividend yield, rather than focusing on dividend growth. What this often leads to is investors focusing on that starting dividend yield and buying stocks that are paying a dividend of six, seven, eight or even 9% dividend yield right now, today. But usually what ends up happening when investors focus on that starting dividend yield as it is today, is that the stock price doesn’t go up at all. In fact, a lot of cases it actually goes down. Or the dividend gets cut or both. And long story short, the portfolio ends up missing. The overall market average you wind up would have been better off just investing in the S&P 500 index, rather than trying to buy dividend stocks, because those high dividend yields today often end up being value traps. Again, Verizon is a great example of this. The 6.4% dividend yield seems high and seems like a great deal, but it’s actually a value trap. The 6.4% dividend yield is all you get. The stock price doesn’t really go up, and the dividend growth rate over the past five years is a measly 2%. That’s less than the rate of inflation, and much lower than the rate that the overall stock market has gone up. But why is that? Well, it all has to do with Verizon’s fundamentals Verizon really doesn’t have much revenue growth over the past ten years, and the cash flows have barely budged. They’ve also been diluting shareholders to finance their operations, and they have a huge amount of debt. The same is true of other telecom companies such as AT&T, ticker T. AT&T pays a 5.8% dividend yield, but their share price is down 22% over the past five years. This high dividend yield is another value trap. Not only are the dividends not keeping up with the overall stock market, they aren’t even keeping up with inflation. So the number one mistake is one that every investor needs to avoid. Don’t focus on the dividend yield as it is today. These are almost always going to be value traps. Instead focus on dividend growth. Companies that pay dividends that are growing often mean you’re going to have a much lower starting dividend today. However, the revenue of that company and the earnings of that company are going to be growing over time, which in turn means the dividends are going to grow over time. And more than likely, the share price is going to grow over time as well. Combined, the dividend yield growth and the share price growth will far outperform the overall stock market. Both Microsoft and Texas Roadhouse have significantly lower dividend yields than Verizon or AT&T do, but thanks to their expected dividend growth and the expected growth in their share prices, the amount of dividends that you get paid five years from now will be far higher. By investing in a company like Microsoft or Texas Roadhouse than they will be if you invested in a company like Verizon or AT&T. That’s because the compounding effect of the growth in their share prices and dividend yields will far outperform the flat performance of telecom stocks. Compounding growth is how you generate a massive dividend portfolio. That’s how Warren Buffett became a billionaire, and it’s how you can reach your goals very quickly as well. Investors who bought Microsoft or Texas Roadhouse ten years ago are now generating a 15% or 17% dividend yield, respectively, compared to investors who had put money into Verizon or AT&T ten years ago, who are still getting that same 7% dividend yield. Investors who started out with Microsoft and AT&T with dividend yields of a mere 1%, are now generating dividend, passive income that is double that of people who put their money into Verizon and AT&T. And that’s just the dividend growth. That doesn’t even include the increase in the share price over the past five years, Microsoft stock has increased 220%, and Texas Roadhouse’s stock has gone up 215%. Compare that to the flat increase in share price in Verizon and the 22% loss in AT&T. So when building a dividend portfolio, don’t focus on companies that have a high starting dividend yield today, but no growth. Instead, focus on companies that have a huge amount of growth, even if their dividend yields are very small today. Because over the long run, those dividend yields are going to become much higher than the companies that have high starting dividend yields, but no growth. In addition, you’re going to be able to build your passive income much faster. Remember, the goal is to build a massive amount of passive income in the future that you can retire off of, not to build a small amount of passive income today. So how do you know if a company will in fact grow their dividend over time and eventually reach that 15 to 20% dividend yield by investing today versus a company that’s not going to grow at all? Well, in order to find that out, you need to learn how to read the company’s financials. Take Texas Roadhouse as an example. Their revenue is increasing by 13% per year, while their profits are increasing by 18% per year. Most importantly, that revenue growth is beating inflation, and that revenue growth means this company will be able to continue to increase their dividends in the future. You also need to look at the free cash flow because free cash flow is what will allow the company to continue to pay their dividends. In the case of Texas Roadhouse, their free cash flow is increasing by 10% per year. So this is a company that will not only be able to continue to pay their dividends in the future, they will be able to pay higher dividends in the future. What you want to stay away from are companies like Intel that have had to cut their dividends. Intel’s free cash flow has been negative for the past three quarters in a row, and that is why Intel’s dividend has been cut, because their free cash flow remains negative, their dividends are most likely going to get cut again. So free cash flow is key to seeing whether or not a company will be able to continue to pay dividends in the future, and earnings growth and revenue growth are key to seeing whether or not a company will be able to increase their dividends in the future. Finally, the balance sheet is another indicator of dividend health. In the case of Texas Roadhouse, they completely paid off their long term debt a few quarters ago. Their biggest expense is capital leases, which is basically the rent on their buildings and with their assets far exceeding their liabilities, Texas Roadhouse should have no problems continuing to pay their dividends. So when researching companies to invest in, make sure the free cash flow is positive so that the company can continue to pay out dividends, make sure both the revenues and earnings are growing faster than the rate of inflation, so that the company can increase their dividends over time and make sure the balance sheet is strong so that the company doesn’t run into problems in the future. A company that’s paying a 1% dividend yield today, but is growing that dividend yield at a massively fast pace will far outperform a company that has a high starting dividend yield, but no future growth opportunities. A company that’s high growth with a low starting dividend yield today will end up generating a 15 to 20% dividend deal ten years from now, while the company with a high dividend yield today will more than likely end up generating the same or worse dividend yield ten years from now. The magical effects of compounding growth mean a company with high growth will far outperform a company with a high starting dividend yield, but no future growth. That is why, if you want to build a massive dividend portfolio that pays huge amounts of passive income in the future so that you can eventually retire and become financially free, you have to focus on high growth stocks that have high amounts of dividend growth today, so that your future will be far better off. The next big mistake that I see a lot of investors making is over diversification. Now, don’t get me wrong, diversification is not a bad thing. You don’t want to have all of your money in one single stock. That is just setting you up for huge problems in the future, and it’s far too risky. You do want to be diversified, but you don’t want to be over diversified. You don’t want to have 50 different stocks in your portfolio. Studies have shown that once you have about ten different stocks in your portfolio, your diversification and risk is basically reduced to the maximum. It doesn’t really provide any additional benefit to have more than ten stocks in your portfolio. The amount of risk that you’re able to reduce with ten stocks is the same as you’re able to reduce with 20, 30, 40, or even 50 stocks. And the other problem is, once you have 50 stocks in your portfolio, it’s really impossible to keep up with all of them. It just creates an overly complex portfolio and makes your life a lot more difficult. Trying to keep track of 50 different stocks. If you’re going to get the same amount of risk loss and diversification with ten stocks as you will with 50 stocks, you might as well just choose the ten best stocks rather than picking 50 random stocks. The main problem with having too many stocks in your portfolio is that you simply can’t keep up with all of them. With 50 or even 30 or 40 stocks in your portfolio. Your portfolio is so complex that every single time you go to manage your portfolio, whether it’s every month or every quarter, however often it is, you now have to spend a huge amount of time going through 30, 40, 50 different companies trying to look at all of their financials and fundamentals and trying to decide if they’re still a good investment or not. And you’re not getting any benefit of reduced risk. So you might as well just stick to the ten best stocks to invest in. You get the same amount of risk loss as you do with 50 stocks, and it’s much easier to manage your portfolio over time. An example of a well-diversified dividend portfolio would include S&P global, Mastercard, Intuit, Microsoft Apple VTI, Costco, Texas Roadhouse, Canadian Pacific, and Union Pacific. With those ten stocks, you’re getting a well-diversified portfolio. You’re reducing your risk to the maximum, and you’re not making your portfolio so complicated that you can’t keep up with it So do be diversified. Just don’t be overly diversified. The final mistake that I see a lot of investors making is investing in bad industries. Certain industries are just overly complex or they’re extremely capital intensive And this is a mistake that I made a lot when I was first starting out that I’ve now learned from. Companies in capital intensive industries such as telecom, will very often have to dilute their shareholders in order to invest in new technologies such as 5G internet service. As a result, their share prices rarely go up over time, and these companies almost never beat the overall stock market. I’ve also learned to avoid investing into industries that are overly complex. History has shown that companies in the simplest industries are often the most profitable and the longest lasting, and they have the highest chance of increasing their dividends over time. It is far better to invest in a company with a simple business model like Mastercard, Costco or Texas Roadhouse than it is to invest in a company with a complex business model such as Boeing. It is far easier to process a credit card, sell groceries, or serve food than it is to build the next airplane or rocket ship. A lot more can go wrong when you’re trying to build the next airplane, than can go wrong when you’re just trying to serve food. So my final piece of advice is to avoid industries that are overly complex or capital intensive. Don’t try to pick winners among a losing industry. Instead, find industries where everybody is winning and then invest in the best of the best stocks of those winners. If we do all of these things, we will have better overall returns. We will significantly beat the overall market. And you’ll see why. Warren Buffett invests in dividend stocks and how he was able to generate a 20, 30, even 50% return on his investment. In fact, on average, people who invest in high growth dividend stocks see an average 30% return per year. If you invest just $5,000 per year for the next 20 years, and you’re able to generate a 30% per year return by investing in high growth dividend stocks, your portfolio will be worth nearly $4 million. So take some advice from Warren Buffett and learn from my mistakes. Don’t invest in stocks that pay a high starting dividend yield. Instead, invest in stocks that have a huge amount of growth in both revenue and earnings, and are very likely to increase their dividends over time. The increase in dividends and share price of these high growth dividend stocks will far outperform those dividend stocks that have high starting dividend yields by investing in these stocks, you will far outperform the overall market. In addition to outperforming the overall market, you’ll build a massive dividend portfolio that pays a huge amount of passive income, and you’ll eventually generate the kind of passive income that most people only dream about. So those are my thoughts on building passive income with dividend stocks. Let me know in the comments below what you think about these strategies. Do you agree? Do you disagree? If you disagree, that’s fine. Let me know in the comments. I’d be happy to discuss these strategies with you in the comments below, as well as hear your thoughts and any other high performing dividend stocks that you think might be good investments.