Earning Your First Dollar in Dividend Income: The Hardest Buck You’ll Ever Make

What would you do for a dollar? Most of us get up at five am, shower, shave, drive, and work to earn a few dollars. We have done this for years.

In fact, that’s how they taught us to earn a dollar. Once we receive our paycheck, we use the money to pay for bills, expenses, and fun.

If we don’t work, we don’t eat. Whenever we need to earn more money, we follow the same work routine. Since some bills never end, we continue working until we receive social security.

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There is a different way. Going to work is the only way to make money, right? The majority of the population does it this way, so it must be the only path to earning a buck, right?

There is a different way to earn a buck. In fact, you can earn money in your sleep. You won’t need to work once you earn enough dollars this way.

We call this magical way to earn money “passive income.” Passive income will change everything about your life because it allows you to create money outside your job—even if you’re not working.

The most challenging part of building a passive income stream is getting started. Most people cannot fathom a world where they don’t have to work for money.

I wrote a children’s book about passive income to explain how it works. It is called “A Child’s First Book on Passive Income.”

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Dividend for the win. There are many forms of passive income, including dividends, bonds, royalties, rentals, and residual business income.

Today, I want to focus on the simplest way to earn passive income: dividends. You can start building a stream of dividend income right from your cell phone. Let’s begin.

What is the difference between debt, saving, and investing? The three types of money you must understand are debt, saving, and investing. By understanding how these three monies intersect in your life, you’ll feel more confident as you put money into the markets.

Debt is the power of compound interest working against you. Instead of harnessing this powerful phenomenon in your favor, the banks use it to cripple your chances of financial success—stay out of debt at all costs!

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We use savings to prevent ourselves from going into debt. We can mostly consider savings as money under our mattresses. Recently, the yield on savings has been excellent (around 5%) because of high interest rates from the Federal Reserve. 

Some places to save money are high-yield savings accounts, certificates of deposit, money market funds, and treasury bills. We call a large batch of savings an emergency fund.

Investing is how we harness the power of compounding. By becoming investors, we can outpace inflation, earn passive income, and build generational wealth.

Most people fear becoming investors because they believe it is gambling. However, the value of your dollar decreases every year due to inflation, money printing, and price gouging. Therefore, not investing is the real gamble.

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One of the best ways to become an investor is to purchase dividend-paying stocks. These companies will send you a portion of their profit as a dividend, so you are essentially allowing them to put your money to work.

Getting started with dividend stocks. I recommend everyone start their investment journey on the Cash App platform. It’s simple to deposit money into the app and start investing.

Once you download the app, transfer some money into the cash balance. You will also want to order a debit card from the app.

There is a tab for investing. Select that tab and answer a few questions about your investing history. These questions are mandatory for all investing platforms.

Now, you are ready to transfer some money from your cash balance into a dividend-paying stock. With that first transfer, you will do something that a large portion of the population will never do—earn a dividend.

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Why can’t people earn dividends? People fear the unknown. If your parents never invested a penny, it will be very difficult for you to become an investor.

Parents pass fear to their children, and unfortunately, the stock market has a bad reputation for most average Americans. They see some people get rich while most go broke.

There is a vast difference between a trader and an investor. Traders attempt to make a living from the market by using leverage to profit on some gyrations in the market.

Investors put money into the market with the goal of long-term wealth building and income generation. Investors stash money into well-established stocks with solid track records. They allocate a tiny bit of money to speculation plays (perhaps 1-2% of their portfolio).

You want to become an investor. You will invest your money into companies you personally trust and that have been around for 20+ years. You’ll invest in areas of the economy in which you feel most comfortable. With that, let’s choose some companies so you can earn your first dollar in dividends.

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Choosing your first company. Now, it’s time to select your first dividend-paying stock. But how do you know if a company pays a dividend?

I do most of my dividend research on Wells Fargo or Yahoo Finance. Yahoo Finance is more widely available, so let’s start there.

McDonald’s (MCD) is a beautiful dividend-paying company and one of my favorite businesses. I used to work there during high school.

However, for this experiment, I will use AT&T (T). AT&T’s dividend yield is much higher, and the stock price is much lower. In short, you get more bang for your dividend buck with AT&T—as far as dividends go. Overall, you’ll probably experience more growth with McDonald’s.

Looking at the datasheet for T, we see that the annual dividend is $1.11. They divide this dividend into four equal payments and distribute it quarterly. 

The quarterly dividend is $0.2775, and it is paid in February, May, August, and November. These timelines are important for building a well-rounded and equal-weighted dividend portfolio. 

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To get a $1 payment each of the four months, we must purchase four shares of T. The current price is $18.90, so we must invest around $80. Luckily, we can buy fractional shares on the Cash app platform.

Once you deposit $80 into AT&T, you’ll have to wait until the next ex-dividend date. This is the date the company locks in shareholders for the next dividend. Usually, the dividend comes 1-3 weeks later. You can find the ex-dividend date on the Yahoo Finance data sheet.

Congratulations. You just earned your first $1 in dividend income, and you have achieved something most people will never accomplish. 

You opened a brokerage account, researched dividend stocks, performed some math, and trusted your money to another company. You are now an investor.

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Now, you want to enjoy your $1. I would go to the dollar store or Walmart and spend this money on a candy bar or soda. You won’t be able to purchase much with $1, but that’s beside the point.

The Cash app will deposit your $1 directly into your cash balance. That means you can spend it right away with your Dividend Debit Card. You can also keep the cash balance, reinvest it into AT&T, or put it into Cash app savings.

Conclusion. The best part is that you have given yourself options. You now have $1 coming in every three months. It may not seem like much, but soon it will be $10, $100, and even $1,000.

My wife and I earn $2,000 per month in dividends. It took us five years to achieve this, but we can now pay our mortgage with dividends. How amazing is that?

That $1 will set you free. Keep selling at the same prices until you earn enough dividend income to cover all of your expenses. At that point, you’ll become financially independent. Good Luck!

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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it.  I have no business relationship with any company whose stock is mentioned in this article. All Right Reserved Military Family Investing