Dividend Stocks Cannot Fire You

I was reading an article on Buzzfeed that is about two holidays too old which detailed the aftermath for some people that wore socially unacceptable Halloween costumes. Although each story contained its own idiosyncrasies, they all generally followed this format:

-Someone chose a costume that was racially insensitive, distasteful of national tragedies, or mocked/belittled a subgroup that is generally recognized as a “protected class”.

-Aware of the socially unpopular nature of the costume, some observer took a picture and loaded it to Twitter or Facebook.

-Commotion ensues. The general public attacks the inappropriate costume-wearer on Twitter and Facebook, and it eventually ends with the person deleting all of their social media accounts.

-In every single instance, the person that wore the insensitive costume was fired from their jobs.

I doubt that anyone of you reading this are ever going to be at risk of losing your job for something stupid you wear to a Halloween party. But those stories nevertheless got my mind thinking about the nature of at will employment and the obvious fact that your employer can fire you at any time, for almost any reason unless you are fortunate enough to have a contract stating otherwise.

That can be a pretty scary thing. Over an estimated work life of forty years, there are a lot of opportunities to do something stupid. They are a lot of opportunities to mess up a big project. There are a lot of opportunities to simply rub a superior the wrong way, and you never want to reach a point in your life where someone with power of you has a desire to terminate your ability to make money.

This is one area where stock ownership is quite different. With the exception of a judge (acting at the behest of the IRS, a soon-to-be ex-spouse, or someone you committed a tort against), no one can take away your ownership interest in a company. You can be the most obnoxious, politically incorrect, vile human being in the world but if you own 1,000 shares of Johnson & Johnson, you are going to get that $670 quarterly dividend check.

The Board of Directors at Johnson & Johnson can’t get together over coffee one morning and say, “You know what, that Jack Smith dresses like a slob. Let’s take away his dividend rights.” Or “that Steve Smith tells dirty jokes at all the cocktail parties, let’s cancel his stock certificates.” If you own the stock, you are entitled to your proportional share of the profits. Period. Your ownership rights over a stock are not conditional upon any type of performance. They generate money because you are the owner. With a job, your ability to generate money is always conditional upon you performing in a way that satisfies some superior. It is the most limited, conditional kind of love there is, and it can end instantaneously the moment you do something wrong.

Obviously, I didn’t write this post because I want to train you on how to get away with being a horse’s ass. Instead, I wrote this because I wanted to get you thinking about risk management in your life. If you own 1,000 shares of Vanguard Natural Resources, you are going to get your $207.50 monthly check as long as you stay alive. Those are the kinds of situations that are fun to set up for yourself—money that comes your way as long as you do not die. As long as you are working in an at will arrangement, you are always one stupid mistake away from losing your capacity to generate money.

That is scary because it means third-party people have complete control over your quality and standard of life. Recognition of this fact is why some people approach investing with a seemingly religious fervor. These people recognize that the possession of full power leads to freedom, and that power can only be attained through ownership interests. It’s the only way you can get off the treadmill of measuring success by your ability to satisfy others.