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Are dividends going away? Is our passive income safe? This is a Robinhood update for May
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I love the stock market, more specifically, I love being a dividend investor, I earn paychecks from companies that I don’t ever work for simply for owning their stock regardless of the stock price. As you may or may not know, the ultimate luxury that money can buy is time. The way I chose to achieve that goal is to invest that money at the golden 4% payout rule, and doing that in theory will pay all my bills.
But with the stock market in turmoil, and everything else going on, are dividends safe anymore? Are dividends finally going away? This is a scary thought for passive income investors and today I wanted to take a look at my portfolio with Robinhood to show you exactly where I’m at because my dividends are being cut.
On top of that, Warren Buffet, the smartest and one of the wealthiest investors of all time has decided to sell all his airline stocks including Delta Airlines, United Airlines, Southwest Airlines, and American Airlines. This is not a good sign.
Furthermore, oil stocks have plunged into some of the lowest prices they’ve ever seen and they’re starting to cut dividends. More bad news. Now I want to compare my passive income from April of 2019, to this year’s April of 2020 to see just how much income I have lost.
But first, why did Warren Buffet sell the airlines? In short, he believes that the future of the airline industry will no longer be the same at least for the foreseeable future. To quote him, “The world has changed for airlines, and I don’t know how it’s changed”, He also said he wasn’t sure whether or not the airlines will be able to recover in the future and if the demand for travel will be there in the next 3 to 4 years. Because of this uncertainty, Warren Buffet decided to sell these stocks.
In addition to that, the following companies from my portfolio also experienced dividend cuts: Shell (RDS.B), Unilever for $2 per year and CNP, Center Point Energy which cut the dividend by 48%, losing me $39 annually, and VTI which has lost $6. All in all, this represents a loss of $208 per year. That’s roughly the equivalent of investing $5,200 at 4%.
However, I got a dividend increases too: Johnson and Johnson, $17 a year, raising it’s dividend by 6.3%. $2 from Qualcomm with an a raise of 4.8%, Southern Company at 3.2% for $3, Travelers company for 3.7% or $2 for my position, Kinder Morgan raising it 5% for $3 per year, and $7 per year or 6.5% from Apple.
In April of 2020, I was paid from PRECISELY 30 companies. Last year, I made exactly $440.41. This year in 2020, in April, I made $475.47. That’s an INCREASE of 7.9% from previous year. Not bad considering all the job layoffs, oil markets crashing, and everything else going on in the economy.
Dividends are here to stay, but we may see a slowed growth for the next 3 to 4 years until we recover.
Sources and further readings:
Warren Buffet Sells Airlines: https://www.bbc.com/news/world-us-canada-52518186
Dividends Historical Performance: https://www.gafunds.com/wp-content/uploads/2012/11/imdf_WhyDividendsMatter.pdf
Shell did me wrong
that phone flip at 7:28
Great video. I hope everyone here gets rich… Good luck to you and your investment.
What do you use apart from simply safe dividends to keep tabs on cuts? Are there any free safety scores out there?
"Hold my beer and my dividends disappear"
this stock called gush pays a 79% dividend yeild check it out most volatile stock
so i was wondering why my robin-hood account SPHD is showing no gains and my Etrade SPHD is showing a small gain?? Anyone else notice this??
I wish we had an auto stimulus reinvestment option on Robinhood lol 😃
Hi Andrei, love the show. Your hilarious and bright. What's your take on P/E ratios when choosing stock(s) to invest in.
Right, but dividends ARE irrelevant.
Dividends gets you 440 a month, that's it?! So even with investing in the stock market, you would still need a 9 to 5?
Andrei! If you're not going to bless us with an FF7 playthrough stop teasing us!