Transform Your Finances: How Earning 450,000 Yen Monthly in Dividends Can Make You a Millionaire in 20 Years
Become a “billionaire” by diversifying your investments between high-dividend stocks in Japan and indexes in the U.S….
On September 18, the Federal Reserve Board (FRB), the U.S. central bank, announced the first policy rate cut in four and a half years. The U.S. stock market rallied on the news, and the Japanese stock market is also making a strong comeback. As the market looks for a place to settle down, what kind of stocks should we be targeting now?
We asked Mr. Nanoh, who became a “billionaire” by investing mainly in “high-dividend stocks” with high dividend yields while working as a company employee.
He was in the red for the first 6 years and has been in the black for 15 consecutive years by targeting high dividend stocks. ……
- Profile
- Profile: A part-time investor with over 20 years of investment experience. He started investing in stocks when he was a freshman in college, but was in the red for the first six years. After targeting high-dividend stocks in 2008, he has been in the black for 15 consecutive years, reaching 100 million yen in March 2009. The average annual growth rate of his assets over the past 10 years has been about 19%. He is also the author of the book, “Bakudaimasu” Kabushiki Ga Sukeroku” (KADOKAWA), which is taught by a billionaire who receives an “unearned income” of 410,000 yen per month.
10 million yen turned into 100 million yen in 10 years. …… “High Dividend Stock” investment pays out over 5.5 million yen in total dividends per year!
Mr. Nonono’s investment style is to invest in high-dividend stocks in Japan and in U.S. indexes (indices). In particular, his investment in high-dividend stocks, which he began in 2008, has recorded stable results over a long period of time, and his assets reached 10 million yen in 2011 and exceeded 100 million yen in 2009, making him a billionaire. His current dividend income amounts to 450,000 yen per month, or 5.5 million yen per year.
So, what kind of stock is a high dividend stock? First, let us review the basics. A stock dividend is a distribution of profits by a company to its shareholders. Shareholders receive dividends from the company in proportion to the number of shares they own. Dividends are not always paid and may not be paid in the event of a loss or depending on the company’s policies. Dividends are usually distributed at the end of the fiscal year and are paid once a year (year-end dividend) or twice a year (interim and year-end dividends).
Figures derived from the rule of thumb: …… Dividend yield “4% or more” is the standard for investment targets.
And what is a high dividend stock?
The dividend yield is the ratio of the annual dividend yield to the share price.
The dividend yield is the ratio (%) of the annual dividend to the share price, and is calculated by dividing the dividend per share by the share price x 100. For example, for a stock with a share price of 1,000 yen and an annual dividend of 30 yen, the yield is 30 yen ÷ 1,000 yen × 100 = 3%.
There is no clear definition of a high dividend stock, such as a dividend yield of more than a certain percentage. However, the average dividend yield of stocks included in the Nikkei Stock Average is currently around 2%, so I think it is fair to say that stocks with a dividend yield of 3% or more are high-dividend stocks.
In fact, however, Mr. Nono targets dividend yields of 4% or more as an investment target.
However, he actually targets stocks with dividend yields of 4% or higher. “It is difficult to explain the rationale behind the 4% or higher standard because it is a technical matter, but one thing I can say is that since I set the standard at 4% or higher, I have been able to generate stable earnings,” he said. I can say that this figure was derived from my experience.
Another important condition is that earnings have been steadily increasing. The basis of dividends is the profit earned by the company. If earnings are on an upward trend, there is a greater likelihood that the company will increase its dividend.
This time, we asked Mr. Nanonano to pick out three stocks. In addition to dividend yield and business performance, he also considered the stock price to be undervalued and the company’s position as a leader in its industry.
The most common indicators used to determine whether a stock is undervalued are PER (Price Earnings Ratio) and PBR (Price to Book Value Ratio), and I use each of these as a reference.
In addition, companies that rank first in their industries have several advantages over companies that rank second or lower, such as greater product and service development and marketing capabilities, as well as brand power, making them more likely to be chosen by customers.”
The following is a list of three such companies.
Honda] (stock code: 7267)…aggressive in returning profits to shareholders, including dividends
Honda (Honda Motor Co., Ltd.) is the world’s seventh largest automaker, but the world’s leading manufacturer of motorcycles.
In FY3/2011 and FY3/2012, the company allocated about 50% of its net income to dividends and share buybacks, and has been aggressively returning profits to shareholders. For FY3/25, the company’s forecast is for a decrease in profit, but analysts’ estimates are for an increase in profit. The assumed exchange rate is set at 140 yen to the dollar on average for the full year, which is a strong yen level, so there is a good possibility that the company will increase its profit for the full year.
SBI Holdings] (Stock code: 8473)…Big benefits in a “world with interest rates
A comprehensive financial services group with banks, securities companies, and insurance companies under its umbrella. SBI Securities, a member of the group, is the largest online securities company and has the largest number of securities accounts in the industry, including those of major securities companies.
With the Bank of Japan taking a stance to continue tightening monetary policy and raising interest rates, there is wide scope for the company to benefit from interest income on bank mortgages and margin transactions at securities companies.
Dai-ichi Kosho (stock code: 7458)…attractive for its substantial yield on shareholder benefits.
The largest manufacturer of commercial karaoke equipment and karaoke rooms. In addition to “Big Echo” and “Karaoke Mac” karaoke rooms, the company also operates a number of restaurants.
The dividend yield is in the low 3% range, but if the shareholder benefits are converted into a yield, the yield is more than 6%. However, in order to receive the shareholder benefits, shareholders must hold at least 200 shares. The company does not pay an interim dividend, but shareholders receive a special benefit coupon (worth 5,000 yen) at the end of the interim period.
■Reading of “dividend yield” and “earnings” derived from empirical data: ……. For more detailed information on Nanonano’s high-dividend stock investment methods, please refer to the paid version of “FRIDAY Subscription.
Click here for the blog “Nanonano’s Investment Memo on High Dividend Stocks”.
Interview and text： Kenji Matsuoka
After working as a money writer, financial planner, and market analyst for a securities company, he became independent in 1996. He writes articles on finance and asset management mainly for business and economic magazines. Author of "A Textbook for the First Year of Robo-Advisor Investing" and "Understanding with Rich Illustrations! Cashless Payment Book".
