The 8 Rules I Use to Earn $124.29 in Dividends Per Day

I counted twice, just to be sure...


That's the amount in "daily paychecks" -- more commonly known as dividends -- I've received from my investment portfolio in 2011. This total comes to $124.29 for each day of the year. Cash.

Why am I telling you this?

It's not to brag. I was born and raised in Wisconsin. The typical Midwestern mentality is so ingrained in me, I very rarely talk about money. And I'm not one to show off, either. I drive a Nissan I bought six years ago. I get my hair cut at Supercuts.

I'm telling you this because I honestly think what I've discovered is the single best way to invest, hands down.

I'm talking, of course, about the "Daily Paycheck" strategy. If you read Dividend Opportunities regularly , then you're likely familiar with Amy Calistri and this strategy.

Amy is the Chief Strategist behind our premium Daily Paycheck newsletter. Her goal is to build a portfolio that pays at least one dividend every day of the year. The idea for her advisory came from my personal "Daily Paycheck" experiment.

I've been following the strategy personally for a few years now. In this time, I've not only been able to build an investment portfolio that pays me more than 30 times a month, but the checks are getting bigger and bigger as time passes.

What I like best is that it's the easiest way to invest you can imagine. Once you get started, it runs on autopilot. Of course, you'll make a few portfolio adjustments now and then, but you won't have to anxiously watch your holdings every day.

Now it's time to come clean. If you start this strategy tomorrow, then it's unlikely you'll be earning $124 a day by the weekend.

I've been fortunate to start with a healthy-sized portfolio. And as I said, I've enjoyed the benefits of implementing the "Daily Paycheck" strategy for a few years now, so my payments have grown much larger than when I started.

But here's the good news... it doesn't matter. Whether you have $20,000 or $2 million, you can start your own "Daily Paycheck" portfolio today. The results are fully scalable, and anyone can have success, as long as you follow eight simple rules Amy and I created to build our portfolios, while managing risks...

1. Dividend payers beat nondividend payers.

According to Ned Davis Research, firms in the S&P 500 that raised dividends gained an average of 8.8% per year between 1972 and 2008. Those that cut dividends or never paid them produced zero return during this entire time span.

2. Higher yields beat lower yields.

This is such a "no-brainer" that it doesn't require explanation. Clearly, a bigger dividend puts more cash in your pocket.

3. Reinvesting your checks beats cashing them.

Reinvesting buys you more shares , which leads to larger dividend checks, which buy you even more shares, and so on (this is how my dividend checks have grown).

4. Small caps beat large caps.

A 70-year study of different equity classes showed that $1,000 invested in small-cap stocks grew to $3,425,250. In large-cap stocks it grew to only $973,850.

5. International beats domestic.

The average U.S. stock pays just 2.1%. That's peanuts compared to yields overseas. Stocks in New Zealand yield 4.9%, stocks in France yield 4.7%, in Germany 4.0% and in the U.K. 3.9%.

6.Emerging markets beat developed.

It's much easier for a small economy to post fast growth than a large one. And investors who know this benefit. In the past 10 years, Vanguard's MSCIEmerging Markets ETF (NYSE: VWO ) has gained an average of 10.7% per year. Stocks throughout the developed world, as measured by the MSCI EAFE Index , have been up an average of just 4.8% per year.

7. Tax-free beats taxable.

Tax-free securities often put more cash in your pocket at the end of the day -- especially if you're in a high tax bracket. A muni fund yielding 6.0% pays you a tax-equivalent yield of 9.2% if you're in the 35% tax bracket.

8. Monthly payouts beat annual payout.

Getting paid monthly is not only more convenient -- you actually earn more. Thanks to compounding , a stock paying out 1% monthly yields far more than 12% -- it can actually pay you 12.68% if you reinvest.

Action to Take --> By following these eight rules to build my portfolio, I have been paid about $124 a day in 2011, while seeing rising payments. In November, I earned 37 checks, at an average daily amount of $160.30.

I've been investing for the better part of two decades. During this time, I've tried just about every strategy and style you can imagine. And don't get me wrong -- you can make money any number of ways in the market .

But earning thousands of dollars each month consistently? I never experienced that until I implemented the "Daily Paycheck" strategy.

-- Paul Tracy

P.S. -- My ultimate goal is to build a portfolio that pays me $10,000 a month. In November I pocketed $4,808.87, so I'm well on my way. To learn how easy it is to set up your own "Daily Paycheck" portfolio, be sure to read this memo. It has all the details on how to get started yourself.

Disclosure: Neither Paul Tracy nor StreetAuthority, LLC hold positions in any securities mentioned in this article.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

© Copyright 2001-2010 StreetAuthority, LLC. All Rights Reserved.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.