Companies Paid Out $1.4 Trillion in Global Dividends in 2019
Three Funds to Invest in to Capture a Slice of the Global Dividend Pie
Yes, you read that right. In 2019 alone, businesses across the globe paid a combined amount of $1,400,000,000,000.00 in dividends to its shareholders (investors, just like you). Here’s the exciting part. There is nothing holding you back from participating in the global economy that allows you to profit alongside some of the world’s most well known, or not so well known, companies. The iPhone or Android you are reading this on, the vehicle you drive (Ford, Toyota, Chevrolet, Nissan, Tesla, Honda, the list goes on and on), the electricity you use, that favorite drink you consume; all contribute to the profits that companies bring in. Our financial and economic system is structured in a way that allows you to invest in and profit with the companies that are providing the world with its daily products and services.
Next time you are sitting at Starbucks, shopping at Target, filling your car with gas or simply flipping the switch to turn on a light (or doing that on your phone now, cause there is an app for literally everything), remember that these established companies are not only providing these services, but are paying you to participate with them as well. We live in a time with ample resources and opportunities. Just as you used that app to turn on your lights, you can also use your phone and app to instantly invest in companies that operate all over the world. Did I mention they paid out $1.4 trillion in cash, in one year? I’d say it is a great time to be alive.
“Successful investing is about owning businesses and reaping the huge rewards provided by the dividends and earnings growth of our nation’s — and, for that matter, the world’s — corporations.” John Bogle
Dividends are one of the best ways to tell if a company is profitable or not. Companies that continue to increase their dividends typically have a steady cash flow and market advantage. Often times, people purchase a stock and speculate where the price will go. To me, that is closer to gambling than anything else. It comes down to your own personal goals and theories, but I prefer to invest in a mix of companies that I can foresee operating in the next ten to thirty years. Then, investing is not as risky. There is no need to check the price of the stock every day because I know the price will always fluctuate, but the companies that I have invested in should weather any financial storm that comes its way.
If you have already invested or are dipping your toes into the water for the first time, remember that the money you invest should be looked at as a long-term investment. The moment you look at it as a get rich quick scheme is the instant you will be inclined to sell your investments the moment things turn south. Investments are like a roller coaster, but history shows it continues to keep going up. That is where the patience and persistence starts to pay, literally.
- Vanguard Dividend Appreciation ETF (VIG) — This fund chooses companies, over 180 of them at that, from the S&P 500 (if you are not sure what the S&P 500 is, check out this article) that have consecutively increased their dividends for at least the last 10 years. You get invested in solid companies that typically weather the financial storm better than others. I am sure you have heard of companies like Microsoft, Visa, Johnson & Johnson, Nike and Costco. These are only a handful of companies that you will be invested in when you purchase this fund. So, in the event one of the companies suddenly takes the turn for the worst, it will not impact your portfolio much at all since it is invested over dozens of companies across every industry. When businesses are able to increase what they pay to investors every year for 10 consecutive years, it means they are running a successful organization. The fund has seen an average annual return of 13.19% over the last ten years and pays out a 1.70% dividend/yield.
- Invesco S&P 500 High Dividend Low Volatility ETF (SPHD) — This is a high dividend low volatility fund that picks 50 companies from the S&P 500 that have given elevated dividends and sustained low volatility for the trailing twelve months. What that means is it chooses companies that pay out strong dividends that also do not see their prices fluctuate as much or as often as other companies. This is due to the strength and market position that these companies hold. A majority of the companies in this fund are in the financial, utility and energy industries. This fund pays a current annual dividend/yield (income given for an investment) of 4.30%. Also, it pays out its dividend monthly. The earlier you receive that dividend, the sooner your money can begin working for you to continue making your dividends and investment grow.
- Vanguard High Dividend Yield ETF (VYM) — Although similar to the SPHD fund that chooses companies based on the previous 12 month performance, this fund ranks companies based on their forecast of dividends over the next 12 months. This is a relatively conservative and extremely diversified fund that has over 350 holdings (holdings means it is invested in that many companies). This fund is currently paying out an annual dividend/yield of 3.11%. It has seen an average annual return of 13.13% over the last 10 years. This fund is invested in a lot of familiar companies like AT&T, Coca-Cola, Exxon, Intel, and Verizon, to name a few. With big names like that, now can you see why these are solid investments that you do not need to speculate if they will be around for awhile?
If you want your money working for you in an array of industries over a span of hundreds of different companies, these funds are designed so that you can invest in confidence without worrying about the ebb and flow of the market.
Investing does not have to be this stressful venture that forces you to stay awake at night. Do you go to bed every night thinking you are going to lose your job? I hope not. The same applies for your investments, especially when they are being invested in solid businesses that pay out substantial dividends. There are billions of people on this earth that are all requiring similar products and services. The companies that provide these services are paying out a hefty amount of cash every year to those that invest with them. So, take a deep breath and pretend you are sitting at a beach like that woman is. You can invest in confidence and can enjoy life along the way. Get your feet wet, soak up some sun and have some fun investing.
*This is not financial advice. For educational purposes only.