What's the point of using your free time to make more money if you don't have the time to spend it?
That was the question I arrived at after reading Steven Landsburg's "The Theory of the Leisure Class." And it's a good question.
You can't manufacture time
Time is a precious commodity. Until Back to the Future technology comes around, no one will be creating hours in the day. Whether you're a big-shot executive or just a regular guy who spends some of his extra hours browsing the market for top investments, I'll bet there are other things you'd rather be doing.
According to Landsburg's article, the average American's amount of pure working time has decreased since 1965, from 42 to 36 hours a week. But for people whose incomes are higher when compared with inflation-adjusted dollars of 1965, their amount of working time has either stagnated or increased precipitously. The luxury of extra time has been bestowed on those with a depressed income.
Do you invest for leisure?
Much of this may seem obvious to people in pursuit of wealth. But do you want to spend what little free time you have buying, selling, and tracking volatile companies with investing theses that change on a regular basis? Companies like Intuitive Surgical
If you get your jollies from playing the market like that, then believe me, I have no objections. I spend a bit of time each week doing exactly that, because it's fun. But for me, it's certainly not the way to go about investing in your future. Once it becomes a commitment, it loses the edge that makes it entertaining.
My recommendation: Go for dividend payers.
Stocks that create time
Why? Well, with dividend stocks, before you even broach the investment thesis and time frame, you can count on a steady flow of cash from the dividend. And while it's highly recommended that you reinvest those payments, you certainly don't have to. Furthermore, if you're an investor who demands constant appreciation from a company and you're frequently impatient waiting for your stock to reach its full potential, then dividends are a great way to keep you pacified until that happens. A company like Aluminum Corp. of China
Most significant is a dividend payer's ability to generate tons of cash on a yearly basis, so much so that it's necessary to distribute it back to investors. For advanced investors, I realize that this isn't the most attractive argument, but a balanced portfolio with some solid dividend payers can certainly steer you through some of the stormier periods of the market -- you need only look back to recent weeks for a reminder.
More time, more cash
With a few of these stocks in your bag, you can feel comfortable taking your eyes off the computer screen or the ticker tape for days, weeks, months, and hopefully, years.
The whole point is to free up some time for you, right? Let me get you started with a few companies. I've screened for companies that have robust yields, strong insider ownership, are trading at a discount to recent highs, and have a payout ratio that is sustainable.
|
Company |
Dividend Yield |
Insider Ownership |
|---|---|---|
|
Quality Systems |
2.5%* |
36.6% |
|
Chesapeake |
5.7% |
6.8% |
|
New York Times |
2.9% |
6.0% |
|
Safety Insurance |
2.6% |
10.0% |
Make it a commitment
I'm not saying that these stocks are perfect investment opportunities. But they are the type of companies that can generate time for you as a result of their steady distributions of cash. We focus on just these kinds of investments at Motley Fool Income Investor. Our recommended stocks are beating the S&P by 10 percentage points since we started, and on top of that, our picks have an average dividend yield of 4.2%. A risk-free 30-day trial requires nearly zero leisure time to cancel if you're dissatisfied.
More than anything, these dividend-payers will allow you to pursue other interests in your new-found leisure time. After all, where's the fun in being cash rich if you aren't time rich as well?
Fool analyst Nick Kapur owns no shares of any company mentioned, but balances his portfolio with dividend payers for the cash and for the time. Intuitive Surgical is a Motley Fool Rule Breakers recommendation. Legg Mason is an Inside Value pick. Quality Systems and Safety Insurance are Motley Fool Stock Advisor recommendations. New York Times is an Income Investor selection. There's always plenty of time for the Fool's disclosure policy.
