2 HUGE Mistakes Stock Market Dividend Investors are making RIGHT NOW

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Two huge mistakes that dividend investors are making right now in the stock market you might be making one of these two mistakes right now in the stock market that’s what i’m sharing with you guys here today by the way welcome in the financial education channel if you’re new here i am jeremy i want to share something that’s gonna potentially save you guys a lot

Of money there’s a two traps that i call in dividend investing that suck people in and they end up just losing a lot of money by getting involved with these two things i personally thought it got involved with both these things as someone that’s in the stock market you think you almost think there’s like a bunch of ways you can like kind of like one-up the system

There’s like another smarter way you can do things and these two ways trap a ton of people getting involved with dividend investing stocks which by the way dividend investing is a beautiful beautiful thing okay dividend investing is amazing why because you gave asically just hold the stock they pay you at all this dividend money you go ahead and you reinvest that

Dividend money into the same stock or different stocks you get to continue to build your wealth by basically just holding stocks it’s an awesome awesome thing okay dividend investing is beautiful but there’s some things people get trapped into that i just kind of want to explain you guys so you can hopefully save yourselves a lot of money and by the way i want to

Let you guys know if you’ve got the becoming master of the stock market course in the past i just uploaded five new lessons to it well for in-depth lessons one’s an intro called dividend investing mastery so if you’ve ever gotten that course in the past literally once you log in you can watch the whole new lectures and there’s four lectures when i go into how to

Tell if a dividend is safe that all the metrics you need to be looking at to actually tell if a dividend is safe or not because a lot of people invest in stocks and the dividends they invest in or even safe dividends okay i talked about what makes a great dividend stock all the metrics you need to look at all the things you need to think about when taking a great

Dividend stock i go into examples of actual companies public companies that i feel are great dividend stocks that’s a very helpful lesson and then the last lessons on how to build a great diversify dividend portfolio so if you’ve ever gotten that course in the past literally log in and all the lectures should be up for you now if you want to go ahead and get that

Course i got a 70% off today for you guys i’ll watch this video so if you want to go ahead and take advantage of that and get that entire course it’s a lot more of dividend investing it goes into what i look for in stocks and all those sorts of things so you want to check out that course it i have as a ping comment and if you’ve gotten in the past that’s uploaded

Now okay guys let’s get into this you guys the first huge mistake dividend investors make in the stock market they get trapped into this it’s basically something that actually happens in the short term okay it’s basically a short term play that some dividend investors think or is a very smart move it’s like oh man i found this way around the system this is such

A smart thing okay this is what a lot of people think okay so basically what they’ll do is they’ll go ahead and buy a stock right before that stock goes you know ex-dividend date ok the ex-dividend date which is usually the date you have to hold a stock on ok so this talks about to go x dividend as soon as they held that that you know stock through the ex-dividend

Date then their plan is the next trading day is to basically sell that same stock ok so sell whatever shares i bought in that stock so i’m gonna go ahead i’m gonna buy this stock right before it’s gonna go x dividend which is the date i need to hold it to and then right after that that day that i need to hold the stock to then i’m gonna go ahead and sell my shares

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And this is gonna be a brilliant idea and why do they think this is a brilliant idea well basically what they think is they can collect the dividend ok so they think they’re going to be able to collect the dividend and go ahead and take advantage of that and then basically just sell out of the stock the next day and hopefully they you know made a bunch of money

On the dividend hopefully the stock didn’t move much it’s only a day or two difference and they went ahead and sold that stock ok so in a friend and i got caught into this trap very bad ok we thought we were so smart we could up the system okay so what we did we thought about this we’re like oh my gosh this is so smart you buy it ex-dividend day you sell it on the

Next day whenever you can sell it you know and you can still collect the dividend this is so smart so we buy into the stock i think it was yielding something like an 8 percent yield ok and we’re like oh my gosh why is no one else figure this out oh my gosh we’re gonna make so much money from this new plan we’re gonna we’re gonna do weather you know climb to the

Sky this is beautiful ok so we go ahead and when we execute this and the payable day comes ok so a payable day comes in you go ahead and you actually collect your dividend but the issue is the issue ok in the stock market whatever whatever the after the ex-dividend date whatever the amount of money that is paid out in dividend the stock has to open up that down the

Next day okay so basically meaning i think the stark paint us around a dollar per share or something like that meaning the next day after okay the day after basically the stock has to open down a dollar okay it’s something the exchanges do because people probably try to figure out this system in the past okay so it has to open up you know down a dollar essentially

If that’s what they paid out if it let’s say it was ten cents the company paid out ten cent dividend then next day guess what ends up happening the stocks got opened down ten cents a share okay so what ends up happening is you don’t gain it all in the system actually you end up usually either breaking even or a lot of times losing money unless you get really lucky

And maybe the stock market just happens to take off that day and the stock market has an unbelievable day maybe this can reverse course and that next day when you go to sell your stock maybe you can sell it for somewhere around breakeven and maybe actually make a profit on it okay but usually that comes far between okay and what we found it’s usually that’s not the

Case and the stock will actually open that next day the day you’re supposed to sell the stock it will actually open more negative than whatever you collect it in the dividend payment okay which is obviously a very bad thing so let’s say you collect $1.00 per share in dividend payment a lot of times that stock will open you know negative a dollar 25 or negative a

Dollar 50 or something like that and a lot of times it will trade under you know basically a dollar plus down that next day if it paid out a dollar dividend so really you end up losing money in the whole situation and you’re very lucky if you can break even and just make a slight profit guys and so this is just a huge dividend trap huh people get caught into it’s

A little short term play that a lot of people think oh my gosh like i figured out a way around the system just believe me guys imagine how many very intelligent people have you know come and gone in the stock market over the past 100 plus years right and if there’s some magical way of just getting ridiculous games because imagine if this actually worked imagine

The type of gains you get you get hundreds of percent gains per year or thousands of percent if it was actually literally possible without cheating the system okay like actually you an inside information or something like that it was actually possible to get hundreds percent gain per year or thousands of percent gain a year like consistently you know that would

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Have been figured out a long time ago and we’d have people work trillions of trillions of dollars and we all be like warren buffett jeff bezos who cares about those guys they’re nobodies look at this guy he gets thousands of percent gain or hundreds of percent gain because literally you could just go stock by stock and just do that day in and day out every day the

Markets open look at the biggest dividend stock go ahead and buy that stock then go ahead and sell it like it doesn’t work guys like like you know just kind of think about it like you people would have figured this out a long time ago and would have already gained the system okay so that’s the first one this is a short-term dividend plate the next one is even a

Bigger one that a lot of people get caught into this trap will lose you unfortunately a lot of money already guys this next one costs people more money than any dividend investing mistake out there and basically what you have happened is a massive amount of dividend investors get caught into just looking at the yield okay they look at the dividend yield and based

Upon that dividend yield they judge if a stock is a good dividend stock or a bad dividend stock and i can tell you this is the last thing you should be looking at okay this is literally the last thing you should be looking at as a dividend investor there are so many factors that go into picking great dividend stocks for the long term rather than just looking at

A yield so people are like oh it’s if it pays a 1% or 2% yield it’s a bad dividend stock when it’s like okay if you’re planning to hold the stock 5 10 15 years which a lot of dividend investors like usually that’s a good decision a whole long term right i in a company you believe in you’ve researched them fully you believe in them a lot you believe they’re gonna

Raise dividends there’s a ton of different factors to look at so a lot of people think 1 for 2% yield currently equals that dividend stock i can’t i can tell you that as a hundred percent false if you’re looking at that way you’re looking at the wrong way and so they think like oh if it pays a three percent or five percent or 7 percent yield this is a really great

Dividend stock and i’m just telling you if you’re viewing it that way you’re viewing this game a hundred percent in corporate and here’s why guys there’s a lot of metrics that are very important such as a payout ratio okay if you invest let’s say you invest in some stock that’s paying you know a 4% yield that you think that’s such a high yield irr and this talks

Doing great if it pays if it’s got a 95 percent payout ratio 85% payout ratio how much are they really gonna be able to raise that dividend in the future you’re probably gonna get no dividend raises in the future and then they’re getting so close there with the payout ratio that guess what that 4% yield might end up dropping in the future why because hand i’m not

Having enough money to pay out and so therefore they have to cut the dividend actually okay so just looking at oh whatever it’s yielding think about this what about the competitive environment okay what about competition okay what about the competition this is something you should always factor and we’re picking dividend stocks what if somebody comes in and knocks

Your dividend stock off it meaning like they actually you know start losing market share and whatever they do they actually start losing business their net income okay what if their net income starts down trending or is down trending consistently okay let’s say this company was earning a billion dollars of net income a few years ago now they’re earning let’s say

500 million dollars okay we’ve got a down trending dividend stock let’s say this stock is paying a 6% yield right now is that really a good dividend stock when their competition is taking eating their lunch when net income is just you know fallen 50% over the past few years is this really a good dividend stock just because it pays a 6% yield absolutely not because

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You know what’s gonna end up happening a cut is coming okay a massive dividend cut is coming this there’s so many dividend investors that fall into this trap full-time general electric is a perfect example of a company that dividend investors fell for the trap under electric was yielding very high rate i think it was sometime around this time last year actually

General electric was yielding a very high you know basically yield okay i think their yield was like 7 or 8 or maybe 9 percent and the next thing you know they cut it to nothing okay so you’re a great dividend stock you found that had a 7 percent yield or 8 percent yield that you thought was so phenomenal guess what their business had been down trending for years

Their business had a ton of issues you should have been looking into the business more and not just saying oh my gosh the stock has a 7 or 8 percent yield i see it all the time where somebody thinks they found such a great dividend stock because it paints a 10 percent yield and they get so excited like oh my gosh i found this stock it pays 10 percent you go oh my

Gosh i’m gonna make so much money i make 10 percent my money a year and not even have to do anything it’s so unbelievable and guess what ends up happening that company a lot of times is actually paying out more money and dividends in the earnings per share and a lot of times they’re actually issuing debt okay they’re actually issuing debt to go ahead and fund this

Really high dividend payout okay the only stocks i give a pass to when it comes to paying out you know most of the eps is basically what’s like what i call reits okay a reit is a real estate investment trust trust and for tax reasons a reit has to pay out minimum of 90 percent of their earnings per share basically in the form of dividends okay so if it’s not a reit

Which most dividend stocks are not reits okay there’s another reit then then if it has a super high payout ratio and their net income downtrending i’m just telling you guys you’re gonna end up getting caught into a situation where you lose a lot of money because more than likely a dividend is gonna be cut and what always happens when a company cuts their dividends

I see it consistently our stock will drop 30% a stock will drop 50% you couldn’t see you can go through stock after stock that had a huge dividend yield 5% 7% 9% whatever you know the ton of these companies and what you will find is once they cut those dividends or they get starts getting close like people start talking oh man that company might cut their dividend

Who who ends up selling off the stock heavy dividend investors is that dividend esther’s not going to be investing to come in doesn’t pay dividends and what you’ll see across tons of these stocks look at their stock charts tons of them go down 30% 40% 50% 60% and so you think you bought such a great stock and they pay you out that great dividend a couple quarters

In a row but meanwhile you just took a 30 percent lost 40 percent lost 50 percent loss on a stock that was not a good stock and maybe they could potentially go bankrupt so that’s something you guys got to think about in this game don’t get caught up in to how big the yield is it caught up into the million different other factors you really should be looking at in

This game guys so don’t get caught up into them as those mistakes and you’ll save yourself a lot of money in this guy’s so anyways i hope you enjoyed this by the way it once again if you’ve gotten that becoming master the stock market course in the past it’s gonna be the pink comment down there that’s got the full dividend investing mastery course in it now along

With all the other lessons so if you guys enjoy that thank you for watching have a great day

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2 HUGE Mistakes Stock Market Dividend Investors are making RIGHT NOW By Financial Education

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