The Power of Dividend Investing | The Snowball Effect

Today, I will demonstrate the real power of dividend investing, which is only revealed on a long timescale. That is the compounding effect of dividend reinvestment. Throughout the video, I’m going to illustrate this principle by modeling 35 years of investment. Dividend Reinvestment can be your path to financial freedom and building generational wealth. Comment below if this helped put your investments back into perspective!

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Dividend Growth Investing provides the ability to create cash flow, without selling your position in a stock. This type of investing has a strong compounding effect when dividends are being reinvested back into your holdings. Over time, Dividend Investing can be your pathway to financial freedom!

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Disclaimer: This is my opinion and not to be considered financial advice

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[DividendData]

Did this help put your investment journey back into perspective?

[noahzimmerman-ygqt]

The truth is if you invest and have other income outside of dividends then you will be able to live off dividends without selling. Which means you can pass that on to your kids which will give them a leg up in life

[sarawilliam]

I just switched up my Roth IRA to 50% SCHD, 25% SCHX, 25% SCHG, and my Roth 401k is 70% vanguard S&P 500 index, 20% vanguard growth index, and 10% vanguard international index. Seeking best possible ways to grow $350k into $1m+ before retirement, I'm 55.

[PatrickLloyd-]

I want a balanced portfolio with growth investments, safe investments, and also focus on dividends to gain up to $20K monthly, my concern is picking the right stocks that can survive a recession. How do i go about this ?

[stephaniestella]

Like Warren Buffet said, dividends are only good if the business you’re investing into can’t make good use of that capital. So if you’re trying to invest into businesses with actual growth, looking at dividends is a waste of time. Why are you investing into a company if they’re returning capital to you because they think you can make better use if it than they can. It’s not much different from bond investing. The way I see it if you have a $1 million at some point, that’d be enough to create a portfolio that would pay you between 50k-70k in dividend income...

[Erikkurilla]

The thing to me is, if you invest and have other income outside of dividends then you will be able to live off dividends without selling. Which means you can pass that on to your kids which will give them a leg up in life. $52k dividends received in 2022.

[cpttomnicholson]

Urrh, I get all you said and totally what I needed to watch but would you consider a long right now
worth it? Or wait till full dip? How safe is getting in now considering operation de-dollarization &
taxes too

[mathebulamkhize]

Protecting your capital is much more important than making money. Basically because if you lose your capital, making money is much harder. ''Missing the train'' vs. ''losing your money''. There are a lot of trains, but if your money is gone, it's over.

[Rubenbarlow]

With a limited number of stocks propelling the recent surge, and a majority of traders seeking rapid wealth accumulation as the shine fades from those gains, it's crucial to acknowledge the wisdom that "you won't go bankrupt by cashing in profits." Even Buffett is divesting! I remain indecisive about liquidating my $300k portfolio, given its recent substantial downturn.

[gracesdonny]

Dividends are what got me into investing in the stock market. The thing to me is, if you invest and have other income outside of dividends then you will be able to live off dividends without selling. Which means you can pass that on to your kids which will give them a leg up in life. Have over $600K in my portfolio as I bought a lot of dividend stocks before, I'm buying more now, and I will buy more when it drops further

[darrendemis]

Recently received dividends in my 401k and was astounded by how large they were. I've been consistently investing a percentage of my paycheck even during down markets. If it gives any perspective, my overall portfolio is down about 18%, but my dividends have more than tripled year over year.

I will be going into my fourth year of significant investment next and I'm already seeing the snowball grow. Keep on going everyone and don't lose heart even when markets are down. In fact, as a dividend investor, these market conditions are the most ideal for someone starting out. Your dividends get reinvested for more shares than if markets were up.

[Malaki]

I remember when I started in September 2020, was tough looking at small growth . 12 cents payments n stuff.
Now I'm at 70k, dividends around 250$ a month and growing.
Keep at it. Hardest part my opinion was getting to 10k after that felt it's been rolling.
I'll hit 100k this year for sure.

[Crf-nrjy]

Although I agree with everything you are saying I have a hard time believing that a fund will return a 10% growth rate on stock value AND a 10% growth rate in dividends. A 2-4% growth rate in dividends and 5-7% growth rate in stock appreciation is more realistic.

[tonyglen]

The first version of this video was the first of your videos I ever watched. It's the one that I share with friends and family when I try to explain what dividend investing is all about. I've been a dividend investor since the 80s and still have a hard time explaining it to people lol.

[arigutman]

The power of dividend investing is exactly why I began dividend investing in the first place... I think 2023 is going to be a great year for the dividend growth investors out there, especially the first half of the year to take advantages of the discounted value stocks...

[FinancialShinanigan]

It's nice to be reminded of the snowball effect ever so often, thanks!

[narysis]

Great tool, and addition to the site! Food for thought: factor inflation into the calculation so we can understand the present value of future money. $3M in 30 years is great to forecast, but $3M in 30 years won't buy as much - would love to know how that compares to today's purchasing power.

[morriselee]

Although a nice demonstration of the power of snowball effect which we have seen many similar videos on this topic, without exception, this kind of videos ignores the fact that the # 1 reason people invest is because they want to grow and spend the money to support their whatever real life causes (pay bills, vacations, buy a car, pay for kids education, etc, etc.).. I am all for DRIP for long term, but I cannot wait for 35 years to begin and be able to spend the money. I have bills to pay and want to splurge a bit in my life. If I only focus on whatever (miraculous) result that the DRIP might lead to in 35 years, what a boring and terrible life I would experience?

Rather, I am more realistic. I buy shares every month and DRIP all my dividends. I do not think about 35 years later. I enjoy life and spend as necessary but do not "waste money" on things that may make me "look good". I have outgrown that phase in life already. What does 35 years later look like in my account? I don't know neither do I care. It is just the pie in the sky.

[thepickyinvestors]

Dividends or no dividends, time in the market and dollar cost averaging into solid, profitable companies is the key to a successful investment. Do that, and you'll do well.

[jay]

How does this compare to the growth of a S&P 500 ETF over that same 35 years? I’ve been trying to figure out if it’s worth going the dividend route rather then just go simple and put it into ETFs. Note: this would be in a normal brokerage account, my ROTH IRA is maxed yearly with long term assets. Thanks!