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In my last post, I briefly covered two types of income streams to help boost your monthly income. These two types of streams were dividend investing and P2P Lending. In this post, we cover how to develop a second income stream using dividend based stocks. While this strategy is not new, it’s a great topic to explore and I thought it might be useful to share what works for me.
So, why dividend based stocks? I’ve listed a few key points below:
- Dividends: Price per share payout for each share you own (or fraction of a share)
- Appreciation: While dividends are great, you get the added bonus of the stock growth (or sometimes loss) over the life of the stock.
- Compounding: With fractional shares, your dividends can buy “fractions” of a share. As your holding grow, your dividend payments increase.
- Consistency: Even if the price of the stock drops, a good company will continue to pay its shareholders dividends.
- Emergency Income: Depending on your brokerage, you can tap into these dividends at any time by turning off “dividend reinvestment” if you’re expecting a difficult financial month. The cash from these dividends eventually creates a cushion in your account you can use.
