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Dividend Stocks Deserve a Spot in Your Portfolio! Finding Growth in Divvy's


At Good Kids Trading (GKT), we approach stock trading a bit differently. Many trading groups only chase the high-flying growth stocks. GKT recognizes the often-overlooked power of ‘boring’ dividend stocks.


Dividend stocks are categorized as value stocks. Value stocks have traditionally been around for more than 20 years, their growth has slowed down and they need to entice investors/traders with extra income from a dividend. Value stocks are seen as slow-moving compared to growth stocks.


 

However, the Good Kids know that there's a valuable place for both growth and value stocks in a well-diversified portfolio.


What if you get consistent guaranteed income using dividend aristocrats—companies with a long history of paying dividends AND you also get the possibility of growth by focusing on dividend stocks that are undervalued or overlooked by the market? That is cash flow and appreciation!


 

Most traders focus only on the dividend yields, and when you look at the numbers they don’t get too impressive until you have a larger account.

 

Here’s a simple breakdown of a $10,000 portfolio of dividend stocks:

A 2% yield provides $200 annually.

A 4% yield, provides $400 annually.

An 8% yield, provides $800 annually.


These numbers aren’t that impressive on the surface. When you have a $100,000 portfolio and you add a zero these numbers are obviously more significant. This is why dividend stocks are more popular among older investors who have larger portfolio's. It doesn't have to be this way!



Did you watch my webinar on dividend stocks? You can make money from the information I shared during this hour long video.




 


 

The GKT Mindset with Dividend Stocks:


Dividends alone might seem like a slow path to wealth when you focus on the yield alone, but what if you can build a portfolio of multiple stocks that have the possibility of appreciating in share price?


What does it look like when you have multiple positions that have 100 shares of each underlying and you start selling calls and increasing your yield even more?

 

I find opportunities by looking for dividend aristocrats that are:

1.       Buying shares when the stock is hitting weekly support

2.       Hitting daily or monthly moving averages.

3.       Selling puts in stocks that have high volatility before the ex dividend date (creating a ‘dividend’ by using the premium collected from the put sale) A wheel strategy.

4.       Looking at sectors that are under performing and buying the best of breed in the sector.

5.       Buying underlying’s in multiple sectors

 

Take Profits/ Have an exit plan before you enter the trade


Lock in your profits using resistance on the weekly chart. If you do not have 100 shares you sell when the stock hits resistance (you can trim instead of selling all the shares). If you have 100 shares you selling covered calls when shares hit resistance.

 

Have an exit plan if the stock keeps dropping. You won’t always be right, and the stock market can remain irrational longer than you can stay solvent. Have a line in the sand where you cut your loss and find a new position. No one wants to be a bag holder, so don’t let ego win. Have plan for profits and losses!


 

Dividends are the most passive income stream available. With experience, you can find stocks that offer both dividend yields and growth potential. For those who prefer less hands-on involvement, high-yield dividend ETFs can provide substantial income, especially when dealing with larger accounts.


At GKT, we emphasize the importance of a diversified portfolio that includes both growth and dividend stocks. It’s very powerful when you can take a boring dividend stock and find growth and consistent yields at the same time! Remember, trading is as much about managing emotions and expectations as it is about numbers. Make your trading mechanical by following the principles we teach!


Happy Trading Good Kids!




I provide all of this to you for free. If you enjoy this, perhaps you'd consider buying me a coffee. If you have feedback please let me know. I'm here for you!




None of this is trading advice, it's for your education. I'm just some dude on the internet who’s been trading 2 decades, and I use the stock market as my primary source of income. None of this is financial advice. Any trades or decisions you choose to make are at your own risk, this is purely educational!

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