The Right Way to Retire Early 💵

Fire! (Financial Independence, Retire Early) 🔥

Before we get started-

Like promised, I’m sharing a FREE spreadsheet with the 20 most frequently bought dividend stocks by super investors in Q4 of 2023.

You can access it here! Enjoy!

AND a free spreadsheet with all the changes to SCHD during their recent reconstitution.

You can access it here!

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I love the idea of FIRE (Financial Independence, Retire Early) and the FIRE community. 🔥

But…

I fear there are still many things individuals pursuing this are doing incorrectly, especially when they utilize dividend investing.

Here's where I see the biggest mistake being made:

Example:

Let's say your dividend portfolio has a high yield of around 7%, and is generating $4,000 a month in dividend income.

Your cost of living is $3,800.

So you've achieved FIRE, right?

Yes...but only for a few years. 😬

Assuming inflation is around 3%, in just 2 years your cost of living will surpass your monthly dividend payments.

Because high yield dividend stocks don't typically increase their dividend payments, inflation will quickly eat away at your ability to live off dividends.

The solution to this?

Dividend growth stocks.

Dividend growth stocks are stocks that increase the amount they pay out in dividends every year.

Look at $HD (Home Depot) for example. 📈

The company is yielding around 2.40%, but has a 5 YR dividend growth rate of 13.87%.

That means they increase their dividend payments at around 14% every single year!

So imagine inflation is 3%, but your dividend payments are growing at 14%...

The result is a never ending stream of growing dividend income, allowing you to eventually not only live off dividends forever-

But also giving you even more purchasing power as time goes on.

In my opinion, that sounds like a way better deal then having to stress about what the inflation rate is every year, so you don't lose financial independence.

The best part about all of this?

Much research shows that dividend growth will even allow you to live off dividends faster than high yielding stocks. 💰

Sounds crazy, but it's true.

This is exactly why I'm focused on building a portfolio of high quality dividend growth stocks.

I know this will help me achieve my long term goal of living off dividends in the fastest, most efficient way possible.

If you are someone who wants to be a part of the FIRE community, let this be your warning not to make the extremely costly mistake that so many have already made.

Keep climbing the ladder to achieve FIRE. 🪜

Just make sure once you get to the top, you used the right ladder.

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If you missed it..

I recently launched Tickerdata!

Tickerdata is a spreadsheet integration tool that gives you the ability to automatically pull in live stock data for over 70,000 different stocks, 30+ years of historical financial statement data, other key financial metrics, and it can pull in data from over 70+ stock exchanges all across the world, straight into your spreadsheet.

You can access Tickerdata and download my spreadsheets here.

You can also subscribe to the Tickerdata YouTube here, where I'll post tutorials and even more stock analysis!

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Lastly…

At the end of every month, I send out a newsletter to my paid newsletter subscribers with a list/spreadsheet of all the dividend stocks that I believe to be currently undervalued.

This sheet was received by over 200 dividend investors last month. (Wow!)

If you’d like to receive this sheet at the end of this month, you can sign up here:

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That’s all for now! Feel free to respond to this email and let me know of any thoughts you have!

See you next week!

Dividendology