How to invest in dividend investing careers
Retirement savings are at the heart of the future for many Australians, and the dividend market is ripe for the picking.
Read moreAt the moment, the average Australian has $20,000 in retirement savings, which is more than any other nation.
According to a report from the National Centre for Retirement Research, the amount of money invested in dividend stocks is growing fast, with a rise of almost 5 per cent since 2014.
In a recent report by Vanguard Australia, we found the average annual growth in dividend investments for the S&P 500 is a whopping 28 per cent.
In our analysis, we compared the number of dividend investments in Australia to the total number of shares in the S &D 500, to see how much we could expect to earn on each investment.
We also looked at how dividend investing companies are performing over time.
Here are the key points to consider when you’re considering investing in dividend-paying companies.
The investment options in Australia are varied, but we think there are three main categories:Dividend stocks invest in companies that are generally not listed on any other major stock market.
Dividends are usually backed by dividend payouts or buybacks, so investing in companies with lower earnings, or dividend-heavy companies that pay dividends on a quarterly basis is the way to goIf you’re investing in a dividend-only company, the dividend payers usually own the company, and are paid on a yearly basis.
Diversification is importantWhen diversifying your investment portfolio, you’ll want to keep a close eye on the S and D 500.
They’re the only major stock markets that offer a direct dividend payout to their shareholders.
If you can, we recommend looking for dividend-focused companies that offer the best return per share.
For example, we think the Vanguard ETFs are a good example of a dividend investing company that’s doing well in the stock market because they’re diversified, have a dividend payout structure, and pay out a very small amount of dividends annually.
Vanguard ETFs (VSE ETF)In our own investment portfolio and research, we look at the Vanguard Investment Management ETF (VIM) to see which dividend-oriented companies offer the highest yield per share, or the lowest volatility.
To find out how many Vanguard ETF ETFs you need, visit the Vanguard website, or download the Vanguard app.
We think the average dividend-driven investment in Australia should be around $10,000 per year.
The Vanguard VIM ETF has a dividend yield of 1.00 per cent, which means a Vanguard ETF is worth around $20 per share on average.
Vim is currently trading at about $3.10 per share and offers an excellent payout structure for dividend investors.VIM is also a dividend paying company, so the dividend payout on its $2.90 per share dividend will earn you around $3,000 over the course of the year.
Videlity VIM FundDividits are also available through Vanguard’s Videlity Dividend Funds.
They offer a return of 1% per annum, and a dividend reinvestment rate of 0.5%.
The Vanguard Vanguard Dividends Fund is another good option for dividend investing, and offers a 0.75% dividend reinvestement rate.
The Videlity Vanguard Diversified Income Fund is a great way to diversify your portfolio, with low fees and low interest rates.
If your dividend-seeking interests lie in dividend paying companies with high earnings, then you may want to consider investing in the Vanguard Vanguard Vanguard Fund (VVV).
Vanguard offers dividend-rich companies in this fund, with returns of 1-1.5% annually.
The dividend reinvested at Vanguard Vanguard is 0.50% per year, which gives you around 3% per share over the five-year period.VIAFonds is another dividend-minded option.
The Vanguard ISAFonds fund invests in companies based on the performance of their underlying assets, so it’s a great option if you’re looking to diversified your portfolio.
Investing in dividend diversified companies is an easy way to increase your returns and make money.