CA - Earn 7% Income With 2 Undervalued Dividend Stocks

2024-02-24 09:00:00 ET

Summary

• Income from investments becomes more important as you approach retirement age, and closing the gap between investment income and spending needs is crucial for financial freedom.
• Reinvesting dividend income can help grow your dividend yield faster, as well as compound your capital over time.
• Enbridge Inc. and Verizon Communications Inc. are two undervalued companies with stable business models, sound fundamentals, and high dividend yields.

Why is Income Important?

For younger folks who have a steady job and are many decades away from retirement, income is probably not important. What they need is the growth of their capital. On the other hand, if you are 50 years old or above or a retiree, income from your investments should take center stage. More than your net worth, it is important to know how much income your portfolio is generating and what the gap between your investment income and your basic spending needs is. The sooner you can close that gap between investment income and spending needs, the better it will be for your financial freedom. Moreover, let's say you are still working and don't need the income yet; that income can be reinvested to grow your capital faster. You can compound your dividend income with time by reinvesting the dividends back into the dividend-paying stocks, just the way you compound your capital....

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