Passion for Dividend Investing? Is it easy Passive Income?

One of the great things about dividend investing is that I don’t feel like I constantly need to be watching the market. As lockdown eases, we are starting to get busier in our workplace and the kids are finally back playing sports. This means that I could spend 60 hours at work and spend all weekend running and racing to matches.

While working from home I became a little bit more active on “Money Twitter” and was checking the markets daily. This was not my typical behavior before lockdown as I never really intend to sell my stocks.

Is Dividend Growth Investing Passive?

Passive Income is a strange term and something that is flung around quite loosely. The best I can offer is that you should define what passive income means for you. I like to define it in terms of the work/reward ratio.

For me, dividend investing is not completely passive. This is my choice as I spend time learning, writing, and talking about it almost on a daily basis. This is my choice because I have a passion for it. I love learning about it and I have met some pretty cool people online because of it.

There is another side where you can just pick maybe 9-10 high-quality companies. Probably from the dividend aristocrat list, and forget about it. DRIP is a great feature that most brokers (not mine) have which really makes this possible to be passive.

You may need an hour or so of your time a year to check the companies future outlook but for the rest of your time, you can assume your money is working away nicely for you in the background.

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Dividend Talk

Usually, I write a separate post on our podcast – Dividend Talk. (This is a podcast where two Europeans chat about dividend investing). However, when the weather is good in Ireland I want to spend as much time outside as possible so today I’m combining them into one post. I know the Irish are obsessed with the weather, particularly good weather but we have a saying for this:

“An rud is annamh is iontach”

old irish proverb

Podcast Animations

This week, our fellow podcaster and friend Russ from Dapper Dividends created a couple of animations for our podcast. I tweeted about one of them and they are pretty cool. Check it out below.

If you like this and are looking for some animations than I would highly recommend reaching out to Russ. Or check out his gig on Fivver Here.

News of the week

European DGI this week spoke about the Champions league where the mighty Barcelona were beating 8-2 by Bayern Munich. F.C Barcelona have been a power house in European football for decades and it is a complete shock when a result like this happens. I generally like Barca and have been to camp nou, however my affection has dwindled over time as they keep robbing our (Liverpool) best players.

My News was a little more sobering and I spoke about the news that broke that the Uk is in a recession. In fact, most European countries are classified as being in a recession. What’s classed as being in a recession?

Why are the markets rising!

I won’t pretend to be an expert in this field but I cannot say that there is not a niggling thought that the markets will crash soon. I feel like the markets are completely out of touch with the economy and it feels similar to the run Bitcoin had in 2017. The question I asked myself this week was why are the stock markets rising?

Fiscal and Monetary Stimulus

Let’s be honest, the speed and the amount of stimulus that has been injected into the economy have been nothing short of incredible. These levels have certainly not been seen since world war II and in my opinion plays a fundamental role in allowing the markets climb upwards.

Looking at the figures, the US has paid about 13% of America’s annual GDP, The UK amounts to just over 6% and the European union have floated a plan of €2 trillion to member states.

These are vast numbers and the markets are betting that when the global economy does start to get back to normal, the stimulus provided will help it to sustain the markets for another few years.

Already Priced in?

We had a crash in the market back in March when lock-down restrictions began. This appears to have been the worst period and certainly there is more positive news lately.

The fear is never completely gone. As long as people are dying from this but companies such as Pfizer and JNJ are actively working on vaccines. Maybe the markets are hopeful that better news is to come?

Low Discount Rates?

If you look at valuation methods such as the dividend discount model of cash flow analysis you are really trying to calculate the net present value of a companies future earnings.

The discount rate makes it possible to estimate how much companies’ future cash flow would be worth in the present. Low discount rates can almost compensate for any disruption in short-term earnings. This is because the required earnings growth does not have to be as big as if there was a high discount rate.

Fundamental Analysis

Over the last few months, you may have noticed that I have started to write my thoughts on companies in my portfolio. I have roughly 39 companies and the plan was to review one each week. That is proving difficult to achieve as sometimes I just get lazy. Sometimes I think I should change my name to the lazy investor.

One tool that has helped me was a fundamental analysis Gsheet that European DGI has shared. This splits up the analysis into 6 different sections. Tune in to hear us talk you through each section. Also here is an example of how I used it on Walgreens Boots Alliance.

Interesting Blogs

I came across this post from Budgets are sexy titled Investing With Family … the Good, the Bad, the Meh. This topic is something that comes up a lot due to the joint venture I had with my sister in law. We have a great relationship and while there have been some disagreements. It has never been enough to have a negative impact on our relationship.

Most people would say NO. And my off-the-cuff advice to any investor is usually, “If you have to ask, the answer is probably no.”

I agree here, If you have to ask the question than you more than likely should not be investing with family. If like me you think it is a good idea, here are some of my tips

1. Be open and honest about your expectations from the start
2. Have an agreement to sell if it ever gets in the way of family
3. Agree on when/or under what conditions you expect to exit
4. Talk often and be open and honest at all times.

I think investing with family can work, it will not always be easy but if you have a good relationship and can be open and honest at all times, it could be a good to get started together.

Upcoming week

Next week I am going to try and be a little more productive than I was this week. I currently plan on doing the folowing

1. Finish my review of Eaton Corporation plc (ETN)
2. Record Dividend Talk Episode 10 on Friday
3. Live Dividend Quiz on Saturday Night with European DGI
4. Finally start my own you tube channel.

Books I Bought this week

Treated myself this week and have ordered a couple of books off Amazon. None of them are related to dividend investing but I hope to gain some knowledge on passive income ideas. Il do a review of each one after I have read them in a couple of weeks’ time. Let me know if you have read them before and what your thoughts are

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