In 2025, Safety Net was once again an excellent resource for evaluating the safety of a company’s dividend.

During the year, 10 stocks were rated “A” for dividend safety. None of them cut their dividends. In fact, since 2023, not one of the 29 “A”-rated stocks has lowered its payout within a year after we evaluated it.

Even more impressive, 50% of 2025’s “A”-rated stocks boosted their dividends during the year, including Iron Mountain (NYSE: IRM), which raised its dividend by 10% six months after my “A” rating was released, Delek Logistics Partners (NYSE: DKL), which raised its distribution each quarter, and MPLX (NYSE: MPLX), which hiked its payout by 12% less than a week after I gave it an “A” rating.

I only gave four stocks a “B” for dividend safety in 2025, but two of them boosted their dividends, while the other two kept them the same. There were no cuts.

Energy Transfer (NYSE: ET) was rated “B” in April and raised its distribution every quarter in 2025.

There were seven stocks whose dividends were considered to have a moderate risk of being cut, receiving a “C” rating. Two raised their dividends; two cut them. The average change to the dividend of those seven stocks was -10.6%.

There were a handful of cuts among the “D” and “F”-rated stocks as well. We gave 12 stocks a “D” grade, and 17 others were rated “F.” Two out of the 12 “D”s lowered their dividends, while three out of the 17 “F”s did so.

“D”-rated stocks had the biggest average drop at 12.4%. “F”-rated stocks only saw a 6.4% average decline, but that number is skewed a bit by one variable dividend that saw a sizable – yet likely temporary – increase.

Back in February, Stellantis (NYSE: STLA) slashed its dividend by more than 50% a week after I issued a “D” rating on the stock.

Advanced Flower Capital’s (Nasdaq: AFCG) dividend wilted in 2025. After I gave it a “D” rating, management proved me right by cutting the dividend twice and then skipping it altogether in the fourth quarter.

In June, Research Analyst John Oravec said there was a strong likelihood that OFS Capital (Nasdaq: OFS) would “have a repeat of 2020 with a cut coming down the line” before slapping the stock with an “F” rating. The dividend was cut in half in December.

All in all, it was another terrific year for Safety Net.

Thanks to all of you who submitted requests for stocks to be evaluated in the Safety Net column. Keep them coming! Leave the ticker symbols in the comments section below.

You can also check to see if I’ve rated your favorite dividend payer recently. Just type the company name in the search box in the upper-right corner of this page, and hit “enter.”

The post Safety Net: The Great Dividend Predictor appeared first on Wealthy Retirement.

In this special “new year” edition of Wealthy Retirement, we’re running a stock through the Safety Net model and The Value Meter… at the same time.

Using these two popular methodologies in tandem – one for dividend safety, the other for valuation – can give us a more complete picture of whether a stock is worth investing in.

Without further ado, here’s the first-ever combined edition of Safety Net and The Value Meter… featuring a company that just made a potentially industry-changing announcement.

Chief Income Strategist Marc Lichtenfeld

Safety Net

Now that the calendar has turned to 2026, lots of folks are making promises to themselves that they won’t keep. However, one resolution just got much easier.

Losing weight.

GLP-1 (glucagon-like peptide-1) drugs have been game changers for patients and the pharmaceutical companies that make them. Now, oral GLP-1 drugs will again move the needle significantly for customers and drugmakers.

Last week, Danish pharmaceutical giant Novo Nordisk (NYSE: NVO) received FDA approval for an oral version of Wegovy, which was previously available by injection only. The change to the company’s financial picture will be momentous.

We won’t have the full 2025 figures until next month, but free cash flow is projected to come in at $7.7 billion, a 28% decline from 2024’s $10.7 billion and 36% below 2023’s total.

However, because of the new approval, free cash flow is expected to jump 34% to $10.3 billion in 2026 and another 27% in 2027 to $13.2 billion.

The sharp decline in 2025’s free cash flow costs Novo Nordisk a couple of points on its dividend safety rating.

Another issue is the payout ratio.

Novo Nordisk is expected to have paid shareholders $7.1 billion in dividends in 2025. If free cash flow slid 28% as projected, the payout ratio would rise to 92%, which is way too high.

This year’s projected $8.1 billion in dividends would lead to a payout ratio of 78% based on the consensus cash flow estimate. That is also too high, but it’s within spitting distance of the 75% threshold for Safety Net. If cash flow is a little higher than expected (or dividends paid is a little lower) in 2026, the payout ratio may come in below the 75% level, and the company would not be penalized.

In 2025, American investors received two semiannual dividends totaling $1.73 per share, which comes out to a 3.3% dividend yield.

In its local currency, the Danish krone, Novo Nordisk has raised its dividend for 31 consecutive years – though American investors may have seen slight reductions because of currency fluctuations.

Due to falling cash flow and a too-high payout ratio, Novo Nordisk’s dividend safety rating is low. But this is an unusual situation with the company’s fortunes about to change dramatically due to oral Wegovy.

Combine that with a three-decade run of annual dividend increases and a likely upgrade this year, and the dividend should be okay despite the poor rating.

Dividend Safety Rating: D

Director of Trading Anthony Summers

The Value Meter

Sometimes the best businesses make only decent stocks – not because the company slips, but because expectations outrun what the cash can reasonably deliver.

That’s the situation with Novo Nordisk today. The business is still excellent. The stock, after a long reset, is finally being treated with more discipline.

The company is the unquestioned global leader in diabetes and obesity treatments. And Ozempic and Wegovy – overnight name brands, it seems – have reshaped how investors think about the company.

For a while, the market assumed that dominance meant inevitability. But recent results remind us that even great businesses have limits.

Over the first nine months of 2025, sales rose 12%, or 15% at constant exchange rates. Operating profit increased 5%, held back by roughly 9 billion kroner (roughly $1.4 billion) in restructuring costs tied to a companywide transformation. Free cash flow came in at 63.9 billion kroner (about $10.1 billion). That’s lower than the previous year, but still substantial.

Capital spending climbed as Novo expanded its manufacturing capacity. That spending isn’t optional. It’s the cost of staying competitive in GLP-1 therapies. Management also narrowed guidance and lowered growth expectations for diabetes and obesity treatments.

Novo trades at an enterprise value-to-net asset value ratio of 8.43, well above the universe average of 3.82. On that metric alone, the stock still looks expensive. The market continues to pay a premium for quality.

Cash flow is what keeps that premium from becoming a problem. Novo generates quarterly free cash flow equal to 11.28% of its net asset value. The universe average is just 1.12%. In plain terms, the company turns its assets into cash about 10 times more efficiently than the typical company. That matters.

Novo is consistent too. While the Safety Net model rewards year-over-year cash flow growth, The Value Meter prioritizes quarter-over-quarter growth. Over the past 12 quarters, the company grew its quarterly free cash flow 54.5% of the time, compared with 46.7% for peers. It also produced positive free cash flow in each of the past 12 quarters.

This isn’t a lucky stretch. It’s a durable pattern.

As we saw above, however, the stock has gone through a humbling year. Shares peaked in mid-2024 and slid through much of 2025.

That move wasn’t driven by collapsing fundamentals. It was driven by disappointment. Investors stopped paying for perfection.

That change is important. Novo is not cheap in absolute terms. You are still paying for elite assets. But you are no longer paying as if nothing can go wrong.

The business earns its valuation. The balance sheet is strong. The cash engine is real. What’s different now is the margin of safety. After the sell-off, it finally exists.

This isn’t a stock for traders chasing excitement. It’s for patient investors who want exposure to a world-class cash producer after expectations have cooled. The upside may be quieter from here, but it no longer depends on flawless execution.

The Value Meter rates Novo Nordisk as “Slightly Undervalued.”

The post Novo Nordisk: What’s Next for the Pharma Giant? appeared first on Wealthy Retirement.

At the end of each month, my meager paycheck was basically gone. I decided I needed to learn about the stock market to make some money.

I read everything I could get my hands on. I spent many Saturdays at the New York Public Library absorbing as much as I could. (This was before the whole world was available on the internet.)

Soon I started trading and investing in stocks. And then my mind was blown when I discovered options.

Like most people, at first, I saw options as a shortcut to quick riches. Fortunately, I knew that I didn’t know what I didn’t know (ya know?), so I didn’t start trading options until I had a better understanding of them.

But even then, I was only buying puts and calls as speculations.

A put is a bet that a stock will go down. A call is a bet that it will rise. These option contracts allow you to control 100 shares of stock for pennies on the dollar for a specific amount of time.

For example, if you thought Bank of America (NYSE: BAC) was going higher in the short term, you could buy 100 shares for about $5,250. If the stock rose 10 points, you’d make about $1,000.

Or you could pay just $325 to buy a call that expires in March with a strike price of $52.50. That means if the stock is below $52.50 at expiration, your call expires worthless. If it’s above $52.50, the call will have value, depending on how high the stock rises and how much time is left until expiration.

If Bank of America shoots higher next week and is trading at $62.50, 10 points higher than it is today, your call would probably be worth around $1,100. So you’d be up $775 on a $325 bet.

If you’d bought the stock, you’d have risked $5,250 and made 19%. By buying the calls, you risked only $325 and made 238%.

You can see why people speculate with options. You risk less and can make a much higher percentage return.

But, as I dug deeper into options, I learned something stunning: The real money in options is in selling them, not speculating with them. When a speculator buys a put or a call, someone has to sell them that option – and they get paid to do so.

Big financial institutions generally aren’t trying to hit home runs buying calls on Nvidia (Nasdaq: NVDA) and taking on that risk, but they’ll be happy to sell you some.

The more I understood this, the more I wanted to sell options to generate income right away.

Now that I’m older, while I still like to swing for the fences once in a while, my priority for my investments is generating income.

Over the past decade, I’ve increasingly used options to generate income with various strategies, including (but not limited to) covered calls and naked puts.

A covered call is when you own a stock and sell a call on it. In other words, someone is betting that the stock will go higher. When you sell the call to them, you get paid immediately. If the stock goes higher, you may have to sell your stock at the higher strike price, but you keep the money you got from selling the call.

If the stock pays a dividend, you can also continue to collect those dividends while you wait, which further boosts your return.

Then there are naked puts. When someone is worried about their stock going down – or speculating on a fall – they’ll buy a put. If you sell them a naked put, you are agreeing to buy that stock from them if it reaches the strike price. (In options trading, “naked” simply means you don’t own the stock already. “Covered,” as in covered calls, means you do own the underlying stock.)

Let’s say you’re interested in buying a stock, but only if you can get it at a 10% discount.

You could sell puts on that stock with a strike price 10% below the current price. That means if the stock drops by 10%, you will likely get to buy 100 shares of the stock at your target price. You also got paid for selling the put, which lowers your effective cost even more.

If the stock never drops to your target price, you still keep the money you received upfront when you sold the puts.

I’ve come a long way since spending my weekends in the library. The time was well spent, as I now have a number of ways to put extra cash in my pocket. Had I sold options 35 years ago, I could have gotten out of that dumpy apartment a lot quicker – and eaten a lot less ramen.

The post I Use These Strategies to Put Extra Cash in My Pocket appeared first on Wealthy Retirement.

Part of that total return has been from the company’s dividend yield. The current yield is 3.7%, though Oxford Income Letter subscribers who bought it when it was first recommended are earning over 8% annually on the original price.

Whether you’re earning more than 8% or today’s 3.7% or anything in between, you need to feel confident that the dividend is safe.

Let’s dig in and see if it is.

CareTrust REIT leases nursing homes and assisted and independent living facilities to operators. It has over 400 properties across 35 states and another 130 properties in the U.K.

Because CareTrust is a REIT (real estate investment trust), we use a measure of cash flow called funds from operations, or FFO.

In 2024, FFO grew 66% to $331 million. Over the past three years, it has grown by an average of 17% per year. That’s exceptional.

This year, that growth is forecast to slow to 8%, with FFO coming in at $359 million. In 2026 and 2027, growth is expected to accelerate into the double digits again.

CareTrust REIT paid shareholders $172 million in dividends last year for a payout ratio of just 52%. This year, the projected $189 million in dividend payments should result in a payout ratio of 53%.

So the company generates nearly double the cash flow that it needs in order to pay the dividend. With FFO expected to continue to rise, the company should be able to keep raising the dividend, as it has every year since it began paying one in 2014.

CareTrust REIT has everything you want to see in a Perpetual Dividend Raiser. It has a stellar track record of annual dividend increases, it generates strong cash flow, and it has a low enough payout ratio to ensure that the dividend should remain intact even if the company hits an unexpected obstacle.

It’s no wonder the stock has performed so well over the past several years.

CareTrust REIT’s dividend is very safe.

Dividend Safety Rating: A

What stock’s dividend safety would you like me to analyze next? Leave the ticker in the comments section.

You can also take a look to see whether we’ve written about your favorite stock recently. Just click on the word “Search” at the top right part of the Wealthy Retirement homepage, type in the company name, and hit “Enter.”

Also, keep in mind that Safety Net can analyze only individual stocks, not exchange-traded funds, mutual funds, or closed-end funds.

The post This REIT Continues to Reward Investors appeared first on Wealthy Retirement.

That’s the question I asked my cousin Dave a few years ago when he requested investment advice. He wanted to know about different asset allocation strategies that were all heavily weighted toward stocks.

Dave is investing for years down the road, but he’s a worrier. I can talk all day long about how markets go up over the long term… or how you would have made money 93% of the time over rolling 10-year periods since 1937… or how the only time you wouldn’t have made money over 10 years was if you sold during the depths of the Great Depression or Great Recession.

But none of that matters when your portfolio is down 30% because you’re in the middle of a bear market a few years after you’ve invested.

(Note: I’m not calling for a bear market in the near future. I don’t have a crystal ball. I’m simply pointing out that bear markets happen and that one probably will occur at some point.)

So I talked to Dave about investing in Perpetual Dividend Raisers (stocks that raise their dividends every year), index funds, and actively managed mutual funds. I discussed the pros and cons of each, including managing the money himself versus turning it over to an advisor.

I encouraged Dave and his wife to have an honest conversation about what they would do if the market headed south. Otherwise, the fact that the S&P 500 has a 10-year average total return of 140% over the past 40 years will be meaningless, as they may not be able to handle the volatility.

If they are invested in the market without the proper risk tolerance and the market slides, they will no doubt sell into weakness, probably near the bottom like so many other investors.

When you hear about people who got their clocks cleaned in 2008, it’s usually because they panicked and sold. I’m not judging. The panic was understandable. We narrowly escaped financial Armageddon. (That’s not hyperbolic. The entire financial system was on the verge of collapse.)

But investors who held on were made whole fairly quickly. Even if you bought at the very top in 2007, your portfolio was back to where it started by early 2013.

It’s easy to be rational when stocks are moving higher (as they are today) and say, “I’m in it for the long term.” But like Mike Tyson accurately stated, “Everyone has a plan until they get punched in the mouth.”

If you were in the market in 2008, think back to those dark days and consider whether you could handle a repeat of that experience. If you were not invested then, imagine what it would be like if your portfolio were cut in half. Would you have time to make it up? Would you be able to sleep at night? Would you be able to take it on the chin?

If the answer to any of those questions is no, get into safer assets like bonds, CDs, and money market accounts today.

If a downturn wouldn’t have you up against the ropes, stay invested, confident in the knowledge that markets go up over the long term.

Good investing,

Marc

P.S. What’s the best financial advice you’ve ever received – or advice that you often give to your kids, grandkids, or friends? Drop it in the comments below.

The post Can You Handle Getting Punched in the Mouth? appeared first on Wealthy Retirement.

There are several reasons.

1. A management team that cuts the dividend is likely to do it again.

By reducing the dividend, management has proven that the dividend is not sacred. There are companies that have raised their dividends every year for decades – and others that have never cut the dividend. Those management teams will do everything in their power to ensure that the dividend is not lowered.

A company that has never lowered the dividend (or, even better, raises the dividend every year) projects confidence and sets a high bar for performance.

With track records of solid dividend payments for 10, 20, 30 years or more, these companies would have a lot of explaining to do if the payout to shareholders were suddenly reduced. It would signal that something is very wrong at the company.

Once a company has made the agonizing choice to cut the dividend, each time it does so again becomes a little less painful and a little easier to do.

2. Dividend cutters’ stock performance is awful.

Companies that lower their dividends tend to underperform the S&P 500 by a whopping 15 percentage points over the five years following the cut.

They even underperform non-dividend payers. They have the worst performance and highest volatility by a mile.

3. No one wants a pay cut.

The income that retirees generate from their investments is often an important part of their financial health. If their dividends are being cut or they’re worried about a reduction in income, that can cause a lot of stress and even a change in lifestyle.

While no dividend is guaranteed, companies with outstanding long-term track records of dividend stability and growth can make it easier for you to sleep at night since you’re not as worried about your income.

Dividend cutters have poor performance and higher risk, they reduce the amount of money in your pocket, and they are likely to continue down that slippery slope.

There is almost never a good reason to add a dividend cutter to your portfolio.

The post The Golden Rule of Dividend Investing appeared first on Wealthy Retirement.

Some brand-new research from Hartford Funds and Ned Davis Research shows that my friend’s son is doing the right thing. Dividend payers are critical for investing success.

According to the new data, dividend payers more than doubled the return of nonpayers. Companies that paid dividends returned 9.2% per year on average, while companies with tight fists who refused to share the wealth only generated a 4.3% annual return.

Today, you can earn 4.3% on your cash virtually guaranteed. There’s no reason to take a risk on a stock for an expected 4.3% return.

You may think that 9.2% versus 4.3% doesn’t make that much of a difference. After all, it’s less than 5% per year – just $0.05 on every dollar invested.

But it adds up in a big way.

Starting with $10,000, a 4.3% annual return over 10 years results in $15,235. An investor earning 9.2% ends up with $24,111.

Expand that to 20 years, and we’re talking the difference between $23,210 and $58,137. The dividend investor earned 150% more than the non-dividend investor.

Three decades of investing results in $35,361 versus $140,177.

Forty years means $53,873 for the nonpayers (still less than the dividend payers grew to in just 20 years) and $337,991 for the dividend payers.

The gap widens each year. After 50 years, the dividend payers provide 10X the amount of money as the non-dividend payers.

Dividend payers were 24% less volatile as well, allowing you to sleep better at night and perhaps helping you not bail out of your stocks when things get rocky. That will help your performance over the long term.

All anyone can talk about right now is tech, tech, tech. But investing in a “boring” energy company like Chevron (NYSE: CVX), whose 4.6% dividend yield alone is already above the average annual return of the non-dividend payers, or a regional bank like Bank OZK (Nasdaq: OZK), with a 3.2% yield, gives you a much better chance of boosting your wealth than trying to pick the right tech stock.

My friend’s son is a finance major. He wants to work in private equity, financing exciting startups. But he’s investing his own money where it has historically performed best.

If you’re not investing in dividend stocks, you are leaving a lot of money on the table.

The post Dividend Stocks Are Still the Stars of the Stock Market appeared first on Wealthy Retirement.

They say that the funds should be used to grow the business – either by investing in the business itself or by acquiring new ones.

As former President Joe Biden says, “That’s a bunch of malarkey!”

Let’s look at why that argument doesn’t hold water.

Obviously, I’m not opposed to a management team investing in its business for growth or even buying other companies, so long as it will add to long-term profitability and cash flow.

But often, executives spend shareholders’ capital on ill-fated acquisitions simply because the money is there.

In my book Get Rich with Dividends, I mentioned a discussion I had with Scott Kingsley, the then-chief financial officer of Community Bank System (NYSE: CBU). He explained to me why the company has a policy of consistently returning capital back to shareholders in the form of dividends.

He said, “We are very ‘capital efficiency’ conscious. We believe ‘hoarding’ capital to potentially reinvest via an acquisition or some other use can lead to less-than-desirable habits.”

He went on to say that because of the company’s dividend policy, when management wants to make an acquisition, it usually must go to the capital markets for financing, which forces it to closely examine whether the transaction really makes sense.

Let’s Make a (Bad) Deal

How many horrible acquisitions can you name?

Chances are management made them because it had the cash on hand, so what the heck? Got to spend it on something, right?

In 1994, Quaker Oats (now part of Pepsi) bought Snapple for $1.7 billion. Just three years later, the company sold Snapple for $300 million, losing 82% of its investment. That means $25 per share of Quaker Oats shareholders’ money went out the door and into the pockets of Snapple’s owners. Would Quaker Oats’ shareholders have preferred a dividend instead? I’m not a mind reader, but I’m going to guess yes.

Similarly, in 2007, Clorox (NYSE: CLX), which does have a solid track record of returning cash to shareholders, paid $925 million to acquire Burt’s Bees. Four years later, it took an impairment charge on the acquisition of $250 million, or $2 per share.

Would Clorox’s shareholders have appreciated a $2 per share dividend? I’m sure they would have.

Now, that doesn’t mean Clorox would have issued a $2 dividend had it paid the right price for Burt’s Bees, but you can see that companies can be easily tempted to spend shareholders’ money, no matter the price, in order to land a prized acquisition.

Dividends = Stronger Earnings

Studies have shown that companies that pay dividends have more reliable earnings than those that don’t.

Douglas J. Skinner and Eugene F. Soltes, professors at the University of Chicago and Harvard University, respectively, concluded…

We find that the reported earnings of dividend-paying firms are more persistent than those of other firms and that this relationship is remarkably stable over time. We also find that dividend payers are less likely to report losses and those losses that they do report tend to be transitory losses driven by special items.

So non-dividend-paying companies may use their cash to acquire growth, but dividend-paying companies have stronger and more consistent earnings. And a vital rule of investing is that stock prices follow earnings.

If earnings are better and more reliable for dividend-paying companies, that should mean dividend-paying companies’ stocks perform better.

And we know that they do. Companies that grew or initiated dividends outperformed the general market by 170.6% over a 45-year time frame, while the companies that did not pay dividends barely budged over the same time period.

Dividend stocks beat the pants off those that don’t pay dividends, and shareholders receive income while their stocks are in the process of issuing said beating.

So the next time a friend says a company should have better things to do with its cash than pay dividends, wish them luck with their investing – and just know that you’ll likely be picking up the tab for lunch in a few years, because you’ll be the one who can afford it.

The post Dividend Stocks Beat the Pants Off the Market appeared first on Wealthy Retirement.

The S&P 500’s dividend yield has dropped to 1.23% – the lowest level we’ve seen since 2001.

And it’s not just because stock prices have gone up. The market has fundamentally changed in ways that many income-focused investors haven’t fully grasped yet.

Let me explain why this matters and what you can do about it.

Think back to the old days, when you could build a solid retirement portfolio around blue chip dividend stocks. Companies like Coca-Cola, AT&T, and Procter & Gamble were the backbone of many income portfolios.

Those days are fading fast.

The S&P 500 looks completely different today than it did just a decade ago. Technology companies, which made up about 18% of the index in 2014, now account for more than 30%. Meanwhile, consumer staples and utilities, two mainstays for dividend investors, make up just 5.4% and 2.4%, respectively.

This shift toward tech has dramatically changed what it means to be a dividend investor.

Why? Because tech companies typically pay very small dividends – if any at all. Instead of paying out their excess cash to shareholders, they prefer to reinvest it into growth or buy back shares.

Even more telling is what’s happened to so-called high-dividend strategies. If you buy a high-dividend ETF today, you might be surprised to learn that “high” now means about 2.7%. That’s a far cry from the 4% to 5% yields these strategies used to deliver.

Think about that for a minute. Even if you explicitly focus on dividend-paying stocks, you’re still looking at yields well below what you can get from a simple Treasury bond these days. For the first time in over a decade, bonds are actually paying more than dividend stocks.

But here’s the real kicker: To get those higher dividend yields, you often have to give up exposure to the market’s fastest-growing companies. Most dividend funds have only tiny allocations to technology stocks – the very sector that’s been driving much of the market’s growth and innovation.

This puts income investors in a tough spot. Do you chase yields and potentially miss out on growth? Or do you accept lower yields in hopes of capturing bigger capital gains?

There’s no easy answer, but there is a smarter way to think about it. Instead of focusing solely on dividends, investors need to look at their total return potential – combining modest dividend yields with bond income and potential price appreciation.

Consider this three-pronged approach:

1. Build a core portfolio in dividend payers with strong fundamentals and growing payouts.
2. Include a very healthy dose of bonds, which are now offering some of the highest yields we’ve seen in a decade.
3. Add a strategic allocation in growth stocks (yes, even those tech companies with little to no yield).

This might feel like heresy to investors who primarily seek out dividend income. But the market has changed, and our strategies need to change with it. With corporate bonds yielding over 5% and Treasurys above 4%, bonds can now provide the steady income that dividend stocks used to deliver.

Of course, change is the nature of investing. As market conditions shift, so should your portfolio strategy. Adaptability is essential to long-term success, so don’t let old rules of thumb keep you from adapting to new market realities. The days of exclusively living off of stock dividends may be over, but that doesn’t mean you can’t build a solid income portfolio.

Remember, successful investing isn’t about clinging to what worked in the past – it’s about understanding how markets evolve and adjusting your strategy accordingly. Today’s market may not be as friendly to traditional dividend investing as it once was, but it still offers plenty of opportunities for those who are willing to keep an open mind.

The post The New Era of Dividend Investing Is Here appeared first on Wealthy Retirement.

Despite the fact that I literally wrote the book on dividends, I find it sad that the then-richest man in the world only received pleasure from businesses distributing excess cash to shareholders.

That being said, I do love me some dividends – and all forms of passive income, really.

When I open my brokerage statement, the first thing I look at is not the account balance – it’s the income that has been earned and the projected income for the rest of the year.

I like a growth stock that goes to the moon as much as the next guy. But with those kinds of stocks, you have to do some babysitting: placing trailing stops, making sure you don’t give up too much of your gains, and worrying about them in bear markets. There’s a lot of hope involved.

Passive income strategies tend to have much lower risk and generate immediate income (rather than making you wait to cash in after the stock hopefully rises in the future), and the income can help offset downward moves during volatile markets like we’ve been experiencing lately.

Below are some of my favorite ways to pocket passive income:

Dividend Growth Stocks

Owning dividend growth stocks is an important strategy for not only generating income today, but also maintaining or increasing your buying power tomorrow. Whether inflation is high or low, prices rise over the years, and your income better keep up. Otherwise, your standard of living will suffer.

Stocks that have histories of raising their dividends every year will help you boost your buying power year after year.

Bonds

Bonds have become an increasingly important part of my portfolio.

When the market tanks, I don’t worry at all about my bond portfolio. That’s because I know that no matter what stocks are doing, my bonds are going to be just fine. They’re going to continue to pay me interest, and then at maturity, they will pay me $1,000 per bond, regardless of what I paid for them. If I paid $1,000, I get my money back. If I paid $950 or $900, then I make a profit on them in addition to the interest I’ve been paid.

The only way that doesn’t happen is if the company goes bankrupt. Otherwise, I get paid $1,000.

No stock can guarantee what its price will be on a specific date in the future.

I love the stability, predictability, and profitability of bonds.

Options

Many people think trading options is risky. And it can be – if you’re speculating with them.

But professional options traders make consistent money by selling options rather than buying them. Smart regular investors do the same.

There are various types of option trades that are considered conservative strategies because they minimize your risk and generate income, such as selling covered calls, selling naked puts, trading credit spreads, and others.

These strategies are easier than you think and can produce hundreds or even thousands of dollars in income in a few weeks or months, depending on your timeline and how much you invest.

Rental Real Estate

Renting out your properties certainly can come with headaches, but it’s often worth it. Not only do you generate income, but you also get tax write-offs, and someone else essentially pays down your mortgage.

If you are handy, it can be especially lucrative, as you won’t have to pay a handyman or plumber every time there’s a leaky pipe.

Turn That Frown Upside-Down

I am currently using dividend stocks, bonds, and options to generate income. I have owned rental real estate in the past, and I am looking to do so again if real estate prices drop.

I’m fortunate that I love my job and don’t mind working hard for my paycheck. But seeing that passive income come in every month definitely puts a smile on my face – maybe as big as John D. Rockefeller’s.

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