As I think about the upcoming holidays and facing another lock down in our part of the world, I count myself fortunate. I am a pretty typical middle aged guy with a lot of ideas and not a lot of money, but I am still employed and able to be productive from home. Looking forward, just over the horizon, I see that we will soon have our home mortgage and other debts paid off. It will make a huge impact on our financial situation, so the time for planning is now. With financial requirements cut in half, eliminating the dependance on the employer / employee relationship, living life more on my terms, doesn't seem so out of reach. To achieve that goal there is no point in trading one job for another, so the focus on this research is passive, or mostly passive income streams.
I've done the usual thing and scoured the internet for ideas related to passive income streams. There are a lot of get rich quick schemes and e-learning articles out there. I suspect the vast majority of these rarely pan out as advertised. I found out pretty quickly that most of these guys are making a lot more money from their e-learning products telling me to go do XYZ rather than actually going and doing XYZ themselves. I'm sure that someone, somewhere, made money from these ideas, but how does one narrow down the field to something that fits my personality and lifestyle?
It's rather clichet, but I found the answer is to know yourself. I personally don't see myself ever being a massively famous social network influencer, so just selling an affiliation to my name isn't going to cut it. I'm also not experienced in sales nor do I feel confident in my sales ability, so drop shipping isn't likely going to work out for me either. I think it is best for me to stick to something pretty conservative for the first passive income stream, and set my goals realistically as well. I'm thinking dividend paying stocks, now we just need to figure it all out.
It just so happens that I have $2300 from a previous employer's retirement plan sitting in an investment account doing nothing. I've never invested in the stock market directly, only through my employer's plans, and I have just never figured out what to do with it. How do you pick a stock, a dividend paying stock, or any other investment opportunity over another? I'm not an expert in stocks, not going to try to become one today, and won't bore you with information better stated by others on the internet. I've read quite a bit of information, reviewed some YouTube videos and managed to come up with a few criteria that I'm going to use to make my selection.
My selection for first dividend paying stock to purchase goes to National Health Investors Inc.(NYSE:NHI), here's why. The dividend yield was 6.54% at the time I purchased, and it payed $4.41 per share last year. From what I can tell, 6.54% is on the high side for dividend yield...seems good. Dividend payout ratio listed at 80.18%, which is also on the high side...not great but acceptable, since I don't know really. The dividend growth history shows 10 plus years of consecutive growth in dividend payouts, that's great. This company essentially invests in senior housing and medical care. The boomers are hitting that age and there a lot of them, so it feels like a solid market. The new administration in the white house has pledged to take care of and protect our seniors, so maybe something there. To top it off, it is a REIT (real estate investment trust). I feel comfortable talking about real estate.
I bought 33 shares, so what will that get me?
Assuming it pays dividend as expected, each of 33 shares paying $4.41 per year, we tabulate $145.53 next year in dividend payments. This company pays each quarter, so that will be dispersed in 4 payments of $36.38 throughout the year. I assume this will be deposited back into my investment account rather than a physical check in the mail. That breaks down to $12.13 a month in dividend income. It certainly isn't enough to retire on, but it will be passive. I will not have done anything other than hold the stock, I'll take it.
https://www.marketbeat.com/stocks/NYSE/NHI/
Dividend yield is a financial ratio that shows how much a company pays out in dividends relative to its current stock price. (dividend / price)
Dividend payout ratio is the ratio of the total amount of dividends paid out to shareholders relative to the net income of the company.
