The world is becoming more digitalized. As a consequence, paper cash is being replaced with cards. One of the biggest players in this field is Mastercard.

Mastercard was founded in 1958 and has been in operation for decades. Headquartered in New York, Mastercard works to develop payment channels electronically.

I think Mastercard is set set up to be a great investment for the Gen Z crowd. While they have been around a while, the company is still disrupting and changing the payment landscape.

Take the Apple Card (Note: I own Apple stock, I do not own Mastercard). Apple released the Apple Card to take advantage of the mobile payments system. Goldman Sachs administers the account portion, doing credit checks and managing the customer side of things.

I love that Mastercard saw an opportunity to be THE card for tons of iPhone users. If even 10% of iPhone users get the Apple Card, that will create lots of business for Mastercard. However, they need to be replacing Visa, Discover, American Express, or even users of cash. But that should still make up a big portion of Apple Card users.

Not, lets look at the numbers.

Looking at Mastercard’s 2019 numbers, they have a net income of $8.1 billion. What makes this even better is that their 2018 profit was $5.8 billion. That is huge growth for a company that has been around for as long as Mastercard has.

Mastercard also pays a dividend. I think it is very important to get dividend income for younger investors. Mastercard has more than doubled their dividend since 2015. While the yield is less than half a percent Mastercard should be able to continue to raise its dividend and make payments.

Overall, I think Mastercard is a great investment. I do think it is important to not invest too much in Mastercard, because Visa, PayPal, and other technology firms will try to get into this space. Having said that, this should be a company that gives investors great returns.

Disclaimer: This post is for entertainment purposes only. Consult a financial professional before making investment decisions. Investments can lose money.

As a long term investor, I like putting my money into companies that will be around for a long time and deliver steady, consistent returns. As a young investor, I tend to invest in companies with large growth opportunities, which translates to primarily tech stocks. Today, I wanted to examine a non-tech stock. In fact, it is probably in one of the least sexy areas you can invest in: infrastructure and energy storage. Here, I want to examine a stock I am considering adding to my portfolio.

MDU Resources is a company providing essential products such as sand and concrete to construction projects. They also provide energy development, storage, and transportation services. MDU operates in the western and upper Great Plains of the United States.

Why do I like MDU so much? First, the dividend is great. I am a strong believer in dividends as a component of shareholder returns, because they are tangible and not dependent on the sentiment of other investors.

For 82 years, MDU has been paying a dividend, and has increased it for the last 28. This represents dividend growth during very different economic circumstances. The current dividend yield is 2.68%, which is above my ideal target of 2.5.

Fourth quarter year over year growth of income was almost 25%, a net increase of over $18 million. This is great, as revenues went up about $30 million, showing the company is getting more efficient.

On the qualitative front, there is a lot to like about MDU. First, compared to my personal portfolio they are in a unique industry, and providing infrastructure services can provide a steady income stream. Further, if the economy slows, governments tend to look to infrastructure spending to spur the economy. MDU would get a lot of increased business even if the economy slows a little.

Overall, I like MDU and think I will invest in the company. It would be a great way to diversify, and get some more dividend income.

Note: I do not currently own MDU Resources stock, but I am considering buying it.

Disclaimer: This post if for entertainment purposes only. Do not consider this financial advice or recommendations. Consult a financial professional before making any investment decision.

You hear it all the time: Buy low, sell high. Maximize your returns. It sounds great, right? You get all of the upside of investing (rising values) with no downside (falling share prices). 

But you, young investor, cannot do this. 

Now, there is no law, no regulation, preventing you from buying and selling as you want. However, being able to time the market- that’s impossible. 

Most professional stock pickers get average, to just above average returns. Many lag the market for several years. Honestly, it is impossible to know whether stock prices will go up or down. In fact, when companies report their earnings, the price can drop even with good numbers because they did not surpass Wall Street expectations enough. 

This is silly, right? Earnings beat expectations, but shares drop in value. It happens every year. 

Now, this article isn’t a treatise about why stocks should respond in a certain way based on certain conditions. What I am hoping to show is that news, no matter how good or bad, can move a stock price unpredictably. Thus, buying or selling assuming a high or low in the stock price is not investing but gambling. 

As a young investor, it is extra important to build a solid investment base. This is why so many people say to just keep putting money away into index funds, no matter the stock market. I do pick companies specifically to invest in, but I am broadly diversified, and my goal is to build dividend income. 

Research companies of index funds you like, and put money away slowly, over time. Assuming a 7% average rate of return, which is below historical returns for the market, a $5,000 investment will be worth over $70,000 in forty years. Seriously. Just put it away and forget about it. 

Over the course of your second year, but $5000 away again, but put a little in every month. You have no idea if the market high or low will be in January, or August. So just put a little away. Over the course of forty years, it will average out. And you will capture the market lows when you put money away. 

Getting paid to do nothing. It seems unreal. But imagine: collecting checks every month that you can use to spend on anything. And not a gift card, or credit at a store. Cold hard cash. 

I am working on achieving a secondary income stream through dividends. In this post, I will cover some basics about dividends. First, I will discuss what exactly dividends are. Second, why this is so important to me, and to young investors. Third, I will discuss some dividend stocks I am interested in. Note: all the stocks I write about are stocks I own. 

What is a dividend? 

I will answer this by answering another question first: what is a stock? A stock is a piece of ownership of a company. As a way to raise money, companies will sell a piece of ownership and use those proceeds for business operations. This acts as an alternative to borrowing money that must be repaid. Instead, companies do not have to pay back what their shares initially sell for on a set schedule. But they do pay. 

See, companies still have to reward shareholders. They do, afterall, own the company, and can vote for new leadership if they are not rewarded financially for owning the stock. While companies can undertake stock buybacks (I might write about this in another article), another way they can reward shareholders is paying a dividend. 

A dividend is a payment a company makes to shareholders. While companies don’t have to pay a dividend, it is a big incentive to own a stock, and own a stock for the long haul. The ratio of the dividend payment to its stock price is called the dividend yield. This often ranges from a half to four percent for most companies. This may sound like not that much, but remember, this money comes from the company you own. It is important they retain some earnings, so they can reinvest in the company, and earn more money. 

Often, companies pay dividends quarterly. One stock I own, Disney, pays twice a year. Dividend aristocrats are companies that have increased their dividends on an annual basis for at least 25 years. I like dividend aristocrats because they have seen two economic slowdowns and still increased their dividend payments. 

Why Invest in Dividend Stocks?

I think dividend stocks are very powerful. Being able to count on stocks that pay dividends provides a peace of mind that your money is working for YOU. Remember, not all stocks pay dividends, and some companies dividend payments are volatile. 

On top of that, with your dividend payments, you can turn back around and buy more stocks. Say you own 200 shares of a stock worth $10, so your total equity is $2000. Each stock pays 10 cents of dividends a year. So, after a year, you get paid $20. 

What now? 

With that $20 of dividends, you can buy two more stocks without using any of your own money! And, by buying more stocks, your dividend payment next year is $20.20! 

I know this seems small, but it will keep growing. And if the next year the dividend increases by just one cent, your dividend payments jump to $22.22. You can just keep buying more stocks and growing your dividend payments. 

I believe this is important for young investors because we need to establish a solid base of income early in our lives. We face high student loans, rising housing costs, and even less income than our parents. Developing a secondary stream of income is essential to making more money. 

My personal strategy is to buy dividend paying stocks until I can get $50 of monthly income from dividends. This is not very much, but this represents a big step for me personally. I plan on reinvesting all this money into dividend paying stocks again, thereby increasing my income even more. 

Once I own a large amount of “secondary stocks,” or stocks I bought with only dividends, I will feel good spending this money on anything. But I need to establish a large base first, and that is where I am at right now. 

My Favorite Stocks

Here is a partial list of dividend stocks I currently own: 

• Exelon- Utility that pays a 3% yield
• AT&T- Telecommunication giant with large cash flows. Raised its dividend for years
• Coca-Cola- One of the most popular dividend stocks. Everyone likes Coca-Cola
• Bank of America- Financial firm with steady business

These are all some stocks just to give you an idea about where to start looking. These have all proven to be solid stocks with high dividends that I can use to grow my portfolio. 

I will be looking more at individual stocks in the future, so check back in!

Disclosure: This article is for entertainment purposes. I am not a financial advisor. Consult with a financial professional before making investment decisions. Investments may lose value over time. 

I opened my first brokerage account three months ago. Not going to lie, it was a little scary. Was I going to make the right investment decisions? Was my money safe? How do I even know if I should buy a stock or not?

This post will touch on that a little bit, but I wanted to discuss why I opened a brokerage account as opposed to an IRA. For those who don’t know, IRA stands for “Individual Retirement Account.” This is basically a personal 401(k), except there’s no company match. It’s just your money.

If you start to research personal finance, pretty much the first step you should take gets repeated by everybody: “open an IRA and max out your contributions. Then, invest in mutual funds and ETFs that track the broader market. And, whatever you do, DON’T pick individual stocks!!!!”

So why did I decide to totally ignore this advice? I am not going the IRA rout. With IRA’s, you basically pay taxes on the money you put in, or on the money you take out. With a brokerage account, which I’m using, you pay taxes on both. And dividends. This is beginning to sound like a lousy deal.

The advantage of brokerage accounts is huge though. There are no contribution limits, like an IRA. I can put as much as I want to invest. Second, I can withdraw all my money, at any time, penalty free. With an IRA, if you withdraw before a specific age, you will pay a fee. And, you have to make withdrawals when you meet a certain age.

This is why I like brokerage accounts. It’s my money, I get more control over how and when I contribute, and when I withdraw from it.

And, this is definitely overlooked by the broader finance community, but it’s easy to get started. I use Robinhood, so I just downloaded the app, signed up, made a few transfers and started buying stocks. It was super easy, and honestly it was a little fun too. And this is the most important part about investing. You need to start. A brokerage account just gets me started and excited to invest my money. Some day I will open an IRA, but right now I just want to build up my assets and get in the habit of investing.

In the future, I hope to write more about the positions I have in my account, and why I make certain decisions.