Assalamu ‘Alaikum, Peace be upon you all,

So lately the market has been having more mood swings than a petulant teenager. 

In this environment of extreme market movements, stability and consistency can seem like luxuries that are hard to come by.

This isn’t necessarily true if your portfolio is Dividend oriented.

Dividends are voluntary distributions companies make to their shareholders.

The ability to pay these dividends is based on the company’s actual business and how much cash it is generating, which is ultimately an objective measure that isn’t affected by how investors feel about the company.

This is very different from stock prices which can often become detached from a company’s fundamentals and are driven by investor sentiment, at least in the short run.

As a result, while stock market prices can fluctuate wildly from day to day, dividends tend to be much more stable comparatively.

Take for example chip manufacturer Micron Technology (MU), if you’re following my growth portfolio you know I have Micron Technology stock (MU) in my portfolio.

 In the last year, Micron is down 16%. 

Year-to-date, this company is down 25%.

Despite this drop in its stock price, In April it paid a dividend of 10 cents a share, which is the same dividend it paid in January, which is the same dividend it paid in October.

The long-term fundamentals of this stock are improving, at least as per my assessment, yet the price is still falling. 

So for someone who is looking to their stock portfolio as a source of income, having to sell their shares at this time would be very unfortunate.

However, since the company is dividend-paying, investors are able to get some income from their Micron position without having to sell their shares at an extremely inopportune time.

Now in the example of Micron technology, the stock is paying a really small dividend yield. 

10 cents on a share which is currently trading at around $70 is a dividend yield of less than 1%.

That’s why this particular stock is in my Growth portfolio and not my Dividend portfolio.

In order for Dividends to even hit my radar in terms of significance, I shoot for something between 2% and 5% which is the long-run average of dividend yields for S&P 500 companies. 

That said, this average has been much lower in recent years but is increasing again now that stock prices are falling.


Recently I’ve decided to add a PIF dividend portfolio to the list of portfolios PIF members can follow so that members who are interested in Dividend investing can get some useful insights into Halal Dividend stocks.

BTW, if you haven’t heard already, the first 300 PIF members will have their membership rate locked in forever. So it will never become more expensive for them to maintain their membership. The rest of the members will likely experience annual increases in their membership costs. As of the date of making this video, there is still an opportunity to become one of these 300 members, the link to become a member is in the description.

As it relates to the PIF dividend portfolio, the goal is to create a portfolio of Halal stocks with an average dividend yield of between 2% and 5%.

You may view this as a rather unimpressive return but keep in mind, that this dividend yield is in addition to the hoped-for appreciation in the stock price itself.

So we want companies that are not only going to pay us a dividend but also are going to become more valuable with time.

Since 1926, dividends have contributed approximately 32% of the total return for the S&P 500, while capital appreciation has contributed 68%. 

Also, remember the 4% rule?

I’ve spoken about it a few times on this channel but for those who are unfamiliar the 4% rule is a frequently used rule of thumb to determine how much a person should spend in retirement. 

Basically, this rule says the following: if you add up all of your investments and withdraw 4% of this total during your first year of retirement and in subsequent years, you adjust the dollar amount you withdraw to account for inflation, you should have a very high probability of not outliving your money for at least 30-years, according to the rule.

This rule was created using historical data on stock and bond returns over the 50-year period from 1926 to 1976 and assumes on your investment portfolio of 6%-8% annually.

If you’re able to construct a dividend portfolio that is paying let’s say 2%, instead of selling roughly 4% of your holdings in the first year of retirement, you’ll only need to sell 2% of your investments because the other 2% will come from dividends.

If your portfolio is producing 4% when you retire and your expenses are 4% of your savings then you won’t need to sell anything.

So dividends can be a very powerful source of passive income but it’s going to take a while to get to balances that produce meaningful cash flows for you if you’re just getting started.

Also, keep in mind that dividends are taxed so you may want to construct your dividend portfolio in a tax-advantaged account.

So to construct the PIF Halal Dividend Stock Portfolio I’m looking for:

10 Stocks I’m comfortable investing in from a halal perspective.
Offer a decent dividend yield (between 2% and 5%).
Have healthy prospects of appreciating in price.

It really isn’t easy finding dividend-paying stocks that meet these criteria. 

Especially as it relates to my comfort level because I like to see no material reliance on the use of interest in the company's operations and I’m finding out that a lot of these dividend-paying companies are leveraged up to their eyeballs.

One of the stocks that I was able to find that meets my criteria is:

Novartis AG (NVS)

Novartis AG is a healthcare products behemoth, with a market cap close to 200 billion dollars that researches, develops, manufactures, and markets healthcare products worldwide. 

I have to admit, I do have a soft spot for healthcare product developers. I like to invest in them. Especially ones that are on the cutting edge of innovations like Novartis often is. 

The company has a very robust drug development pipeline, with over 100 promising drugs in development.

If just one of these drugs ends up solving a very serious ailment for some people I’m going to be very happy having been an investor in this company.

As far as its reliance on riba, or interest-bearing debt, in its operations, if you compare its interest expense to its operating expense it's less than 5% is rare for dividend-paying companies paying dividend yields as high as Novartis is.

What is this dividend yield for Novartis? at a stock price of roughly $85, Novartis is currently offering a dividend yield of 3.87% which I think is fantastic and twice as high as the average dividend of S&P 500 companies.

Not only that, since its founding in 1996 it has paid growing dividends every year.

Its price to sales ratio is 3.5 compared to the industry average of 4.5 so it has a reasonable valuation and it is my first pick for our New PIF Halal Dividend Portfolio.

As mentioned, we are adding it to the perks of regular PIF membership. We’ll be building it with time. I want to get to a list of at least 10 best Halal dividend-paying stocks that are updated at least monthly for members.

If that’s something that interests you become a member. You’ll also be able to follow the growth and crypto portfolios that I manage as well as other portfolios we hope to add in the future.

If you are one of the first 300 to sign up, you will have your rate locked in forever.

Everyone else can expect an annual increase in price so hurry up and become a member if you’re interested, link in the description.

Drop a like if you liked the video, drop a dislike if you didn’t, but don’t drop acid because that’s haram.

Until next time take care of yourself. Assalam ‘Alaikum and peace be upon you all.