7 Mistakes to AVOID with Dividend Investing

Are you a dividend investor or considering starting a portfolio with dividend-paying stocks? In this video, I share the top seven mistakes new investors make and how to avoid them. These insights are based on my own experiences, so you can learn from my past missteps and make smarter investment choices.

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Chapters of Today's Video:
00:00 Intro
01:00 Dividend Mistake 1
01:50 Dividend Mistake 2
04:51 Dividend Mistake 3
06:10 Qualified Dividend Tax Break?
09:07 Dividend Mistake 4
10:17 Dividend Mistake 5
12:02 Dividend Mistake 6
13:52 Dividend Mistake 7
14:36 Wealth Building
15:09 Mid Career Warning

🌟 Key Insights:

📊 Mistake #1: Ignoring the Payout Ratio
Understand the sustainability of dividends by evaluating the payout ratio.

🕳️ Mistake #2: Falling for the Yield Trap
High yields can be tempting, but they may indicate financial distress.

💼 Mistake #3: Overlooking Tax Implications
Know the difference between qualified and non-qualified dividends to optimize your tax strategy.

👑 Mistake #4: Not Considering Aristocrats or Kings
Invest in companies with a strong track record of consistent dividend growth.

🔄 Mistake #5: Ignoring Dividend Reinvestment Plans (DRIP)
Reinvest dividends to maximize compound interest and grow your wealth.

🌱 Mistake #6: Not Balancing Growth vs. Yield
Choose between growth stocks and high-yield stocks based on your investment goals.

🧓 Mistake #7: Not Aligning with Your Life Stage
Adjust your investment strategy based on your age, risk tolerance, and financial goals.

💡 Discussion Points:
🤔 How to evaluate a company’s payout ratio and financial health.
📈 Why falling for high yield traps can be detrimental.
💸 Understanding the tax implications of different types of dividends.
🔍 The importance of investing in Dividend Aristocrats and Kings.
🌟 The benefits of Dividend Reinvestment Plans (DRIP).
🚀 Choosing between growth stocks and high-yield stocks.
📆 Aligning your investment strategy with your stage of life.

🌟 Join me as I delve into these common mistakes and provide actionable tips to help you build a successful dividend portfolio.

#dividends #financialeducation #financialindependence

*Disclaimer: Bob is not a financial advisor. Please contact a professional financial advisor prior to making any decisions. Some of the links and other products that appear on this video are from companies in which Bob Sharpe earns an affiliate commission or referral bonus. Bob Sharpe is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available.

[BobSharpe]

What financial topics do you want to see NEXT on the channel?

[glennshoemake]

1 year total return for AVGO was 111%, not sure why no one covers this excellent dividend compounder.

[alexanderbernard]

Great video, very informative. Could you do a video expanding on that last point more. I’m in the early stage of my investing career and I have a hard time trying to find the balance of being aggressive and choosing my own stocks vs choosing a slow growth but steady dividend etf. I look at how much money it would take to make a livable income off of these dividends stocks/etf and sometimes get disappointed because it takes so much money to get to the point where it’s a livable dividend income. Basically a portfolio breakdown of at what age group should we have growth stocks and dividends paying companies and etfs, if you haven’t made this video already.

[marywest]

My favorite dividend stock is Ford. It has a good return and has always paid in the four years I have owned it. 🙂

[tylerfreeman]

I’ve had ticker symbol O for a little while. I know that is a popular dividend stock. What are you thoughts on this dividend stock?

[RetPlay]

Great tips. Actually mistake number 5 may force me to switch from M1 finance. Pies are cool to automate investing but they don't support DRIPs...

[CalmerThanYouAre]

Risk #1 is underperforming broad market index funds in risk-adjusted total return net of taxes and fees.

Most dividend and income investors lag the market by a large margin, and often with no less portfolio volatility. They’d have had far more wealth if they’d have just bought the S&P and sold shares as needed to produce the same amount of income.

[bigmac]

Hey there, I'm new to the channel. Does tip #1 mean that REFI, which has a high dividend percentage rate for a cheap stock, is a safe bet and not a red flag? It's an REIT at 94.5%

[e.m.-lwdn]

Great video, appreciate the info you give on dividends.

[NowOnline]

Quick question: Do I have to pay taxes every year on dividends that are reinvested into my SCHD fund within my Fidelity Brokeragelink account? Or do i just pay taxes on the dividends once I withdraw the dividends in retirement at age 59.5?

[JustFC]

I put a lot of cash into a company (French Yellow Pages) that paid 11% dividend at the time... did really well for 3 years, then went on a mission (military), came back to the company being down 96%, and no more dividends... losing 96% of your investment really hurts, was more than my yearly salary

[bluegillmich]

I liked seeing the dividends from HRZN, after 5 years (reinvesting dividends) i had my cost average low, but seem to almost never catch the price. My Portfolio analyzer said to run away ( which i finally did)

[MrCptSilva]

Hey Bob, Nelson here. I am little confused on the dividend mistake #2 when you talk about the net and operating income. I was following you with my SA. Now on video you only showed the arrow to "Operating Income" and not net. But I continued on to find the net income which is just below the "earnings from continuing operations". For me to understand do you look at both or just the one you showed on video here? Its at about 2:40 +/- mark. Thanks bro you doing a great job of making me understand.

[thChairman_Yume]

I have Voo was thinking about adding a small portion of schd. Should I?

[avs-forum]

Good tips, as always. A friendly tip for you is not resist the tempation to use AI in your videos. We come for you explaining stuff, not AI. There are tons of those types but they are not personal. I just want you to keep doing what you do—always helpful and entertaining.

[Prasadbang]

Bob I want to know on what to invest? ETF means, best etfs by comparing the returns graph.

[saifullahkhan]

Invest in heigh yield dividends and use those to reinvest in growth dividends and create a positive feedback loop to reap better results. I think you can do this if you're middle class and young. It will be a game changer in the long term.

[Gogito__]

Your Bob Sharpe but where is Bob Blunt?

[soulseeker]

I comes before U in the dictionary for a reason. I can't help you unless. I am ok.

[phillyboylaboy]

Global x ylds. Ark is the worst. Never again.