Do you have money in a savings or money market account? Have you noticed your money isn't growing?
The reason is because your bank or financial institution isn't paying you a very high interest rate on your money. If you were to look around today, you would find it very difficult to find a savings or money market account paying 1-1.5%. If you did find one paying more, you will probably have to agree to certain requirements like minimum balances, usage, and other factors. As most of you know, the Federal Reserve plays an important role in loaning money to financial institutions at a certain rate. This is known as the Federal Discount Rate. The Federal Discount Rate is "the interest rate at which an eligible financial institution may borrow funds directly from a Federal Reserve bank." (learn more here ) The current federal discount rate is currently at .75 and has been at this rate for a long time. What does this mean? It means that money is extremely cheap to borrow. It also means that banks are not going to pay you very much for your money. So this begs the question, where do you need to invest to get a decent return on your money? I have an answer to that question so keep reading...
Where should You Invest Your Money?
I am not here to give you financial advice but I am going to tell you where I am investing my money. I am investing in the stock market. More specifically, I am buying stocks that pay a dividend. For those of you that don't know what a dividend is it's money that is paid to shareholders out of a company's profits or reserves. This money can be paid monthly, quarterly, or annually and sometimes they even pay a one time special dividend. Bottom line is, they are paying you to own their stock. Now keep in mind, not all companies pay a dividend and the ones that do, can change their dividend policy at any time (increase, decrease, or eliminate all together). To find companies that pay a dividend, it's as easy as searching Google (NASDAQ:GOOG) for "Dividend Stocks" or you can use a wide variety of financial websites that offer search/filter options to find them. The key is doing your research and finding those successful companies that you want to invest in and that pay a dividend. Below is a list of dividends paying stocks that I've researched and/or own.
As you can see above, the dividend yield or the percentage that these companies pay to investors is quite attractive. In some cases, they are paying 2-3 times that of savings rates. Not bad, eh?
For example, let's take a look at AT&T . This company has a long history of paying dividends to shareholders. In fact, if you take a look at the following chart and table below you will see the company has been paying a dividend for over 27 years and the dividend has increased significantly over those years with an average dividend increase of 4.99% since 1985. There is only one time where they had to decrease the dividend but all in all, a pretty good track record.
Where else are you going to get that kind of return in this market or economy? This is just one example of many companies you can find paying investors to own their stock.
With everything in life, there is risk. I am not saying you should rush out and buy the stocks I mentioned above or you should find the companies paying the highest dividends and buy them. What I am saying is there is money to be made in dividend stocks. Make sure you do the research and understand the risks involved before buying these stocks. Good Luck!
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.