This past Friday, I received a message from my broker saying that dividends from a company that I invested in have been deposited in to my account. To say I was ecstatic when I received this message and subsequently checked my account was an understatement!
The dividend payment into my account was made to me by BP. As seen from my journey, I only recently bought BP stock during the September stock market crash of this year. To receive dividends this early is amazing. This is the advantage of a quarterly dividend payer like BP; you are surprised when you get the dividend payment because it comes to you so quick.
During the short period that I have held BP, the stock has been extremely volatile due to the erratic price of oil. But the dividend has more than compensated for the volatility of the stock over my short ownership period.
The amount BP had sent to my brokerage account was £35.69. This has already covered close to 2% of the cost to buy the stock. I don’t want to get carried away but looking ahead, after the first full year of owning the stock, I should receive £142.76 from BP. This would amount to 7.93% of my initial purchase price. BP are literally paying me back for investing in them. As my investment horizon is forever, BP will eventually pay me dividends in excess of the cost used to purchase them. You have got to love dividend paying stocks!
Receiving dividends is both empowering and motivating. Having money paid in to my account certainly makes a change from my account being constantly drained by bills.
By receiving my first dividend payment, I have reached that ‘seeing is believing’ point of income investing. When I just started out, everything was just theoretical. But now by receiving my first dividend check, I know that my goals can be accomplished and that it is possible receive a steady stream of passive income from dividend paying stocks.
The best part about dividends
The greatest benefit of a dividend paying stock is that the income received is truly passive. Once you do your initial research and buy the right stock, you just need to sit back and collect dividends year after year without any effort on your part.
All the handwork will be done by Bob Dudley and the rest of the management team at BP. As long as BP continues to efficiently extract and refine oil, make new field discoveries and maintain their strategic partnerships, I will receive the benefit through my 538 pieces of stock.
I can sit back and watch TV all day, or sleep all day or choose to do whatever I like but as long as BP remains profitable, I will get the benefits associated with owning a part of BP. There is no connection between my labour and the cash generated and paid to me by BP, unlike a job where you earn money proportionally to the time work. In short, by owning dividend paying stocks, you get get paid to be mazy, How sweet is that.
I am starting to see the link between delaying gratification and receiving the rewards of pursuing business ownership. It is an exciting feeling. I need to keep going and keep purchasing dividend paying stocks in order to reach my goals and have complete control over my time.
What was your first dividend paying stock?