Website Income vs Dividend Stocks: Which One Comes Out On Top?


Hi lovely readers.  Here’s a fantastic guest post on the “passive” income of the internet vs dividends by Dividend Ninja.  Not only does he write great posts, he does great designing too (in case you didn’t know, he redesigned my site to make it look H-O-T!)

For several years I ran an independent web design company, and spent countless hours designing and working on websites for other people. It goes without saying I learned almost everything about the web industry inside and out. After six years of pushing the mouse for others, I finally decided I had enough, and retired the business in 2010. It was an easy shift for me, because I already had a part-time position in my regular work.

In the back of my mind I had always wanted to develop my own websites for my own income stream, and I certainly had a few ides. I certainly had no idea what blogging was about, passive income, the degree to which some bloggers were earning a solid income, or even what WordPress was. In fact I thought I had pretty well missed the social media boat altogether!

So in an attempt to learn WordPress, I created a small test site about investing, which quickly morphed into the Dividend Ninja. I was surprised how quickly the site grew. I also realized that like any investment or project, things would take time and patience. So I wrote a few articles, kept writing, and hoped it would grow from there. Obviously after 16 months, it has worked out just fine. ;) But if it wasn’t for my interest in dividend stocks, there wouldn’t be a Dividend Ninja!

What I Could Earn with Dividend Stocks?

Dividend stocks are to the investor, what passive income is to a website owner. You buy shares of solid companies and let the dividends roll in month after month. It’s not a quick get rich scheme but a long term investment plan. Let’s say I wanted to retire and live off my dividends. If I earned a nominal $500 per month in dividends, how much of an investment portfolio would I need to start out with? Currently my dividend stocks and bond ETFs create a dividend stream of around 4.5%. This means I would need a beginning value of $133,000 dollars to earn $500 per month in dividends. To be more realistic, a dividend investor with a conservative portfolio is earning around a 3.5% yield, or would require a starting value over $171,000. That’s a lot of capital for a modest monthly income.

What Could I Earn With A Website?

On the other hand, earning $500 from a website is not out of reach, and is really only a matter of the time it takes to generate website traffic, and being able to have the patience to stick with the plan. Not everyone makes it, but if you are willing to work hard and put in the time it is possible. The start-up costs for a website are virtually nothing, and cheaper than going to Starbucks a few times a month. You can register a domain for as little as $10, and your monthly hosting is about the same. So for less than
$150 per year, you can be up and running! How many businesses can you do that with?

You can even start with the WordPress site or Blogger if you’re really strapped for cash. You may decide to get a premium WordPress theme, or even buy some plugins, but you don’t have to. The bottom line is your only investment for a website is time, persistence, and some plain old fashioned luck! Of course it depends how you cost out your time, but from a bank point of view you don’t need $133,000 dollars to start!

What Are Bloggers Really Earning?

The real question is what are bloggers really earning? When I attended FinCon11 (The Financial Bloggers Conference), Wise Bread presented an excellent seminar on exactly that question. According to their survey results 34% of bloggers earn less than $500 per month, 23% of bloggers earn $500 to $1000 per month, and another 23% of bloggers earn $1000 to $5000 per month. That means that half of the blogging community earns less than a $1000 per month for all their hard work. So if you’re thinking of
blogging as a road from rags to riches – think again. ;)

Websites Have Tangible Value

One interesting point about websites is they can also become valuable – they can indeed become a tangible asset, almost like a virtual real-estate. A few bloggers have turned around and sold their websites for small fortunes. In fact if I was to stop blogging today, I know for a fact I could get several thousand dollars for the Dividend Ninja if I really wanted to. But something to consider is your website is worth 12 to 24 months of the monthly revenue it creates. So your website, just like a stock, may indeed have a tangible asset value.

Of course you can’t put a website into a 401K, RRSP or TFSA. Nor are there any guarantees in the web business. I’ve seen some pretty fast and sudden changes over the years. When I started, Google had just come on the scene as a search engine, and facebook didn’t even exist! Recently, Google made several significant changes to their algorithm. Bloggers have also been disqualified from AdSense for reasons they were not aware of. So with changes like that, I certainly wouldn’t want my entire retirement portfolio (even if it was possible) riding on my website income.

How Long Does it Take?

Creating income from a website is not a quick get rich scheme. If it is then you are extraordinary lucky.  Building a website takes time and a lot of hard work and effort. If you expect to create a website, throw some Google AdSense up, and sit back while you rake in a few hundred bucks – then you are going to be sorely disappointed. You’ll be lucky if you even make $5 per month when you start! It takes time to create a website that engages readers and generates $500 to $1000 per month in ad revenue, and not
everyone makes it. I’ve seen a few fine bloggers give up after their first year anniversary – and that’s unfortunate. The perks from a website don’t really come until the second year! But to make a long story short, you can make a nice part-time income from a website if you’re patient, persistent, write good content, and have luck on your side. In my opinion a website makes a great investment!

The Dividend Ninja is a DIY (Do It Yourself) investor, who started blogging in 2010 about his journey into dividend stocks. You can learn more about his thoughts on dividend stocks and index investing at theDividend Ninja.

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90 Responses to Website Income vs Dividend Stocks: Which One Comes Out On Top?

  1. There really is no income better than a passive one, and I love dividends most of all even though they are not entirely stable.

    • Stick with the big stable blue-chip dividend payers :) These U.S. multinationals (i.e. Procter and Gamble, Johnson and Johnson among others) are more stable than any other investment I can think of right now ;)

    • Hi Steve, yes you are absolutely correct – good point! You cannot put AdSense (or other ads) on a WordPress.com hosted blog.

      But this is a really cheap way for someone to test out their blogging skills and see how they like it, before investing a dime :) Sometimes people start blogging with all kinds of expectations, and then give up quickly once they realize the effort involved. This way they can always import their content over once they decide to host the site for themselves. Obviously, its much better to sink the $20 to $30 at the start and host the blog yourself.

      Cheers
      The Dividend Ninja

      • That’s how I started…I’m not raking in big bucks or anything yet, but I started on WordPress and then moved over to blogger so my investment is still minimal but ad revenue is possible.

        • @femmefrugality- Ahh, sounds like a good move! Some people have moved from blogger onto their own site as well. It doesn’t cost very much (what, 3 lattes?) and it may give you more incentive to work harder at traffic, monetization etc.

  2. Great insights. I’m a big fan of multiple income sources, especially passive leaning ones. Maybe I can add blogging income to my list of revenue sources some day (^_^) I’m just starting out and haven’t tried to monetize my site yet, but this is great inspiration. Thanks!

  3. I think one important difference between dividend and website income is the risk. If you are putting $170k into stocks/funds just to earn a few hundred a month, you are taking a pretty big risk. Even if you invest in safer stocks you could easily lose a few thousand dollars in a single day.

    • Kyle,
      I view dividend investing as a long term strategy that takes years not days :) I’m assuming the $170K is built up over several years of averaging prices on a position and reinvesting dividends over the long term.
      If you are only putting money into the market for a few days, and let’s say that was the beginning of August 2011, you would have lost money. But not if you held for the long term. If you are looking at the markets for only a few days you are speculating, but if you have years on your horizon, now that’s investing! ;)

      Cheers

  4. Great post Dividend Ninja! You’re right that you can earn a lot more money via blogging income with far less money invested. It is a lot of work to manage and market a blog though. Even to make $500/month, it is a major investment of time and effort. It can be enjoyable work, but you still have to put in all that time to get decent money coming in.

  5. Great article. I have my domain/hosting through iPage. It’s about 60 bucks for the year. I my blog will ever make enough money to justify the time and effort; much more importantly, I enjoy interacting with people who appreciate my work.

  6. Not sure if you seen DJ, but TFB had an interesting article up recently about how some blogs were beginning to go for 30x their monthly earnings, especially if they had good SE traffic. Do you think that with more and more internet users worldwide our “real estate” is on track to keep increasing steadily?

  7. MUM No I didn’t see the article but I’m going to check it out. TFB knows his stuff – cool guy met up with him at FinCon11.
    MUM I think you are bang on here, and that the established quality blogs will become more and more valuable as time goes on – Just like real “real estate” virtual “real estate” has nowhere to go but up :) We all know GRS had to have sold for over a million. But I think quality content is where its going to be at ;)
    Cheers

  8. Great article! It was awesome to learn how you started out (I was going to bug you about it anyways!) and I’ll definitely see what I can learn about websites, domains, and hosting. You make a good point though; the upfront cost required between dividends and website income is definitely substantial.

  9. Why not take advantage of both forms of passive income. Get yourself a website, start making money there and invest your new income source in dividend stocks. Seems like a win-win to me!

    • Money Infant, yah sure you could do that. :) The only problem with relying on website income is the rules ca change really quickly. The latest Panda update, bloggers being disqualified from AdSense etc. Plus it takes a lot of time to build up a site without any gaurantees.
      So I would say make investing your first priority, but if you have a blog on the side, why mot monetize it?

    • @Money Infant- I think that’s what Money Reasons does :) I don’t have enough discipline for that. Maybe I’ll do that once I stop being a student!

  10. Great post!

    Like a few other commenters, I’m a big fan of multiple income streams. The blogging world is not for riches, but a nice hobby for me. I blog for the fun of it, not for the income. The income is simply a nice by-product.

    Dividend income on the other hand, very different story. I hope in another 20 years, I’ll be making about $30,000 in dividend income. I can’t see that happening with my blog, but, never say never ;)

    • MOA like you I want to have a nice dividend stream in retirment. That’s what I am relying on to take the bank!
      Since I’m spending time on the blog, I’ll take the nice income from that stream as well :) My only real capital outlay on the blog is time (too much time sometimes).

  11. Great Post – I think you have to love the writing before even contemplating making money from a blog. I have only been going a month or so and I am really enjoying it so far. I get satisfaction from people commenting, nevermind making money :) – Your DN site looks fantastic well done!

  12. Very interesting article. Another thing to keep in mind is to choose your topic wisely. I decided to start blogging about English expressions and phrases. I have added Google adsense to it, but it’s not exactly an easy blog to make money off of. :) I hope to get organized and start my own financial blog soon..

    • Ellen, you bring up an interesting point – which relates to keyword strength and competition analysis.
      Sometimes keywords are very unique but they don’t even generate enough traffic flow to get visitors to the site. Without doing SEO research its difficult to know ahead of time – most people fall into this by accident not realizing keywords have weight.
      On othe other hand if you have a unique keyword that does get traffic, then you can work to get to the top of Google for searches on your topic. That entails writing articles that relate to a topic on your keyword (not keyword stuffing posts). Then your site becomes a valuable source and reference.
      Think about it, in the most simple way, its easier to get ranked higher for 500 searches per day than 500,000 searches per day. But if you are only getting 50 searches per day on your topic then you aren’t even gettign enough traffic to make it worthwhile ;) Unless of course you just enjoy writing about your topic. That’s OK as well.
      Cheers

  13. I like the design of this site. I guess the answer to the question boils down to how do you want to spend your time. Would you rather work on a blog for 20 hours a week for 2 years to make $500 extra a month, or work a second job putting all that money into dividend stocks? The time spent on blogging is a big investment as well.

    • Cashflowmantra, yes absolutely. As I point out blogging is very time intensive – how you cost out your time is certainly a factor ;). I don’t think I could work two jobs – though sometimes it seems like blogging is another job.
      Meanwhile I love to keep building up those dividend stocks!
      Cheers

  14. I guess the best thing to do is to start a dividend blog, right Avrom? ;-D

    Besides a few exception, I do believe that dividend investing is an easier way to make money than blogging.

    Take all the hours you work on your blog and get a second job. Then, take all that money and invest it in a dividend portfolio. I bet you that you will be making a lot more with your portfolio than with your website in 10 years…

    • @The Dividend Guy Blog- Wow, TFB that says a lot coming from you! You’re like the Canadian WebMASTER!! :) That’s true but the second job won’t give you the passion and the desire to “do your own thing” on the side and succeed right? I guess people go into blogging for different reasons. I really enjoy (trying) to be creative and writing, and talking to everyone. I don’t think I would feel the same passion working in a second job. But I do agree, I would probably make more money working in a second job than spending all this time blogging.

    • Hey TFB, yah dividends rule. I really like the set and forget it approach to dividend investing, while collecting the monthly dividends – but of course it takes time to build that up as well. :) Once step at a time…

      I would never put all my eggs into the websites basket, there’s too much risk with that, but at the moment it is indeed creating a nice extra monthly income – I view it as a lucrative hobby. Between my real job, my dividend stocks and index investments, and maybe 2 or 3 websites before I’m 50 – I think I have it made! ;)

      Here’s one thing to think about, when some of my coworkers retire, they really don’t know what to do with their time. I’ll still be a web guy at 65 -:)

      Cheers!

  15. They are apple and oranges. A blog is not passive at all. It is a lot of work to earn that $500. Dividend income is very passive and I don’t have to do much to keep that $500 rolling in.
    I heard niche sites are better as a passive income vehicle, but I don’t have much experience when them at this time.

    • retirebyforty Yah this is a key point here. There are really two types of blogs. First are information blogs, and the second types are monetization blogs as I call them (i.e. affiliate marketing, products etc.). Each have their own difficulties and challenges to make money from.
      Niche sites can fall in either category, but they can be gold nuggets – though few hit the gold vien as they say. Niche sites can also have the opposite effect, hitting a keyword with low search traffic and making zilch. In fact I would argue a Niche Site is far harder to market and monetize.
      Cheers

      • @TDN- That’s good to hear because I have no niche sites and I’m getting a bit of niche site envy lol. I would love to be a webMASTER! hahaha That term has just so much power to it, doesn’t it? lol.

    • @retirebyforty- AGREE! If we counted the number of hours/ time spent earning that $500 it would be less than minimum wage. Honest. So much time and effort but I think the interaction and discussion makes it well worth it.

  16. This is an interesting discussing. One thought is this. Where are blogs going to be in 10 years? Probably replaced by something else, but will that business model still exist and be as lucrative. Maybe it will be more lucrative. But who knows. Whereas I would think dividends are a little more predictable. You can be a little more certain of their existence over 20 or 30 years. And you don’t really have to do anything to maintain them. You don’t have to learn a new “blogging” technology or something else altogether.

    • Another thought is this. I’m not entirely sure what a well paying blue-chip stock would cost, but for those who don’t have that kind of disposable income, setting up free (or very cheap) websites is a good alternative to earn some extra money and maybe buy some of those stocks down the road. Yes, making money with a website takes a lot of time, patience and persistence, but what else are you going to do later in the evenings. You mind as well be productive while watching Seinfeld reruns. I haven’t started making money from my blogs yet (I started in January), but there are a lot of lessons that I’m learning from fellow bloggers and trying to apply.

    • Yup :) Johnson and Johnson, Coca Cola, and Procter and Gamble will still be here in 30 years. Can’t say the same for my blog LOL – yah technology changes very quickly. I can’t believe the changes I’ve seen on the web since 2000 to now…
      Dividend investign is rock solid, but I’m going ot max out the web as much as I can – why not?
      Cheers

    • @TDT- Totally agree. I think video blogs are becoming the new “thing” now? Technology is changing a mile a minute. I think it’s fun to stay for the ride, but I know that the fun will eventually end. Dividend stocks on the other hand, are timeless and hopefully appreciate and continue increasing their dividends.

  17. I pretty well consider my blog some sort of job/investment hybrid. I work really hard on it now for no money in the hopes of it someday making money for less effort. Dividends are the investment half of that, in that I work (pay) and hope that they will make more money later (they will). But like everybody else here I do not see any reason to not have both.

      • @TDN- I remember those days very clearly too. I was paranoid (and I still actually don’t know the answer) that the google analytics showed MY OWN visits. I would be so excited for $0.02 in adsense in a day and then I thought to myself “WTF Why are you excited to make $0.02 in a day? That is worse than slave labor for the amount of time you’ve put into it”. Then the income started to increase (to the point of every other month getting a cheque) and now I make the cut every month. It’s a nice feeling, but I know that this, like many things in life, are fleeting. I’m just enjoying the ride while I can!

  18. Nice comparison of two things I need to learn a lot more about. I don’t have +$150K just hanging around to start earning $500 per month in dividends! So it looks like developing my blog is going to have to be the next best top priority. Thanks for letting me know that the second year is where the magic is. That is encouraging to hear!

    • MyMoneyDesign, just like any business it takes time – and the second year is where a lot of us see the results. In the meantime, make small regular monthly contrilbutions to your investments i.e. $100 to $200 per month.
      I am not suggesting anybody to forfeit their investing nest-egg, and hope they are going to hit the big one on their website. It doesn’t work that way for everyone ;)
      Cheers

  19. Great post. It really does take patience starting out a blog. You wonder whether you are just talking to yourself sometimes. Hopefully I can stick with it long enough to see some results!

  20. I spend a lot of time on investing, the website is an outlet for that effort. Making money? It’s possible but i dont have expectations for it. It takes time to build up content and a reputation. Perhaps after time ill make money.

    • @Six figure investor- I agree. To me, writing is a hobby and I enjoy the interaction with my readers. Making some money is the icing on the cake and it certainly helps pay for my tuition ;)

  21. I prefer online over stocks because I get more of a rush. Yeah when I hit big a couple of times in the stocks I was HAPPY but let’s face it… For me I am HAPPIER being creative and if I can make money that way I am at my

    HAPPIEST. :)

  22. I love the comparison of the website to the dividend stocks. I’ve long made the dividend to investment property comparisons and soon will have the trifecta of passive (active) income in full force. (Dividends, Properties and Websites)

    I’m lucky, my old man made a living off of dividend investing for 18+ years, putting us through school and retiring awfully comfortable. When we launch in the next few weeks I encourage you to stop by and check out his picks which probably aren’t on most investors radars.

    Cheers,
    Dan

    • Hey Rick thanks for the comment, yes I would rather go for dividend income as well if I had to choose between the two. I happen to choose both! :)

      Yes of course Google can hit your site anytime with a lower PR, disqaulify you from AdSense on a moments notice or whatever. There is nothing new there… That’s why just like investing, you don’t put all your eggs in one basket. For example AdSense is less than 10% of my overall web revenue.

      However even stocks can tank! Anyone remember 2008 to 2009? Fine if your 30 but if you were retired that was devastating – even worse than a PR0 ranking LOL!

      “A website has no hard, solid tangible value.”

      Really? Do you think Amazon Google and Yahoo are all worthless? How about John Chow, Pat Flynn, Darren Rowe, etc. ? I think a lot of people would disagree on that point, myslef included. Many websites are selling for enourmous amounts of money. A lot of pro-bloggers buy blogs, or they did in the early days building their empries. Take this guy as an example:

      http://www.thefinancialblogger.com/buying-blogs/

      (rumours are the GRS blog sold for over a million) :)

      Cheers

    • @Rick- Excellent point, Rick. Though websites have tangible values like Dividend Ninja mentioned, but I agree that once something happens (aka big G hits the site) it’ll be difficult to recover.

  23. I thought I posted this already but I was wondering in order to make $500 from you blog how many visitors or subscribers would you need. Asking becuase I took a look at some blogs (via
    your TFB link) for sale and many of them were earning under a 100 a month.

    Thanks

    • This is a very difficult question to answer Rob. I know blogs that only have 10,000 visitors a month, but if they are the right target audience you make substantially more than $500. On the other hand, there are many blogs with much more than 10,000 visitors that average less than $500 monthly. It’s all in your topic, your audience, and how you monetize.

      • Thanks, I realize it is a difficult question to answer, For myself I’ve decided to start a blog and focus more on good content rather than just making money. But I will experiment with how best to monetize a site and keep everyone here informed

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