Passive Income Through Dividend Paying Stocks

Sure, you’ve heard of dividend paying stocks and possibly that they can create passive income, but, how? Roland dives into this topic to help your understand how these can become another stream of income for you especially during retirement

I’m sure you’ve heard of dividend paying stocks and possibly that they can create passive income, but, how?

First, what is a dividend?

A dividend is an issuing of cash or stock to a class of shareholders in a company. Normally, dividends are drawn from a company’s retained earnings. Stocks that pay dividends can provide a stable and growing passive income stream for investors. Typically, some investors prefer companies that have dividends that increase year after year. This helps outpace inflation.

Passive Income

They are usually paid by well-established companies that no longer need to reinvest money back into their business. A few examples of companies that pay dividends include Target, Apple, Disney, as well as, Power and Insurance Companies. 1 Certain American companies have a record of growing dividends — with no cuts — for decades. Different dividend investors may prefer one strategy over another, depending on whether the goal is immediate, stable income, or long-term growth and profit.

When choosing a strategy, determine what level of risk you prefer and how long you are willing to wait for your dividends to produce a substantial income.