Dividend investing can be a perfect way to earn passive income. I started this blog years ago, intending to earn passive income from dividend stocks. That’s why I chose the domain name passive-income-earner.com. However, I wasn’t investing for passive income initially.
I failed to set the criteria for passive income investing — something like the following. First, the dividend stock should provide a sufficient yield. Second, the business cannot be so volatile that there’s a chance of a dividend cut. Third, the stock should allow you to sleep well at night.
Does the dividend stock have a big enough yield?
Some dividend stocks, even though, they’re backed by quality businesses, are not good for passive income. For example, Canadian Pacific Railway (TSX:CP)(NYSE:CP) yields only 0.8%. The best five-year GIC rate is going for 2.3%. So, I would require a dividend stock with a yield of at least 3% for passive income.
Happy Thanksgiving Day, Canadians! Our American neighbours will be celebrating Thanksgiving on November 25. This is due to Thanksgiving was originally set for celebrating good harvest and since Canada is more up north, Canadian farmers would harvest sooner.
While enjoying stuffed turkeys, it’s a good time to reflect on things we’re grateful about. In terms of dividend stocks, I’m thankful to have the following holdings in my portfolio. I also want to thank you for reading this blog. :3
I used to trade in and out of stocks, looking for quick profits. More recently, I was able to refrain from selling my Fortis (TSX:FTS)(NYSE:FTS) stock even though I knew it was fully valued at the time. The thing about investing is there’s no absolute right or wrong answer. The path is only clear in hindsight.
I remember last time I traded out of Fortis stock, it did pull back. But eventually, it worked its way steadily higher. That’s the type of business it is. If you’re looking for a dividend stock that will increase its dividend year after year, Fortis is a solid pick, as a regulated utility that earns stable and predictable returns.
I’m thankful that Fortis stock remains a part of my dividend portfolio. And if it becomes cheap enough again, I’ll pick some more shares up if I have excess cash. It’s the kind of dividend stock that doesn’t require much monitoring.
Thank God we have maintained a diversified portfolio. Although we feel a bit queasy to see our growth stock holdings fall a lot recently, it’s nothing we’ll lose our sleep over. Besides, my stable dividend stocks have been resilient with some that have appreciated recently! That stability has helped keep us calm despite the growth stock volatility.
Here’s a comparison. Shopify (TSX:SHOP)(NYSE:SHOP) stock has fallen about 20% from its all-time high in about 2.5 months and ConvergeTechnologies (TSX:CTS) has declined about 26% in about 5 weeks.
While the main stock we’ll talk about in this article, Merck (NYSE:MRK), has popped about 15% in roughly 2 weeks. First, we’ll go over why we started a position in the dividend stock. Second, we’ll discuss why it recently popped.