Dividends 101 | Bagofcent$

What about Dividends 101?

This is a great question and we should all be aware about,what is a dividend investment strategy, how to invest the right way and what kind of long term scenario we could go for. It is easy to say,let me invest in a stock dividend but if we don’t know the basic ,we will lose all of our hard earn money.

Dividend…

What is a dividend: It is a stock that we purchase from the bank or a company that will pay us in a form of dividend (gift-profits-payment-return)a certain percentage per month or per year. Let say you have great interest in a company called Johnson and Johnson because they do offer some great products (Neutrogena, Listerine…). You decide to purchase 10 shares of this company at $50 per share and in return the company will reward you a percentage of let’s say 5% per year… Wait there is more.

Return…

What kind of return you should expect? 5% of 50$ is 2.50$ (year). Taking in consideration that your invesment will be paid per month at a rate of (2.50$/12months =0.2083) per share and you bought 10 shares it equal to 0.2083$ x 10 shares =2.0833$. Yes, there is a lot of numbers but i have to make sure this is clear because we do see a lot of informations online but never in details so at the end we don’t understand much.

How to pay us the investors…

The company will pay us from the profits that was uncountered during the year or the last month. There is no stones left unturn but we have to do our due diligence, so we are safe and don’t end up in the street. It is not a complexe avenue to take the time to understand how to invest comparing to give 100% of our money to the bank or to a investment company that will tell you,we promiss you this and that but if they do lose your money,what can you do. Difficult i may say to fight this.

What to look for…

There is a saying “you are serve better when you take care of your own stuff” or something like that, so tha’t what we intend to do here. What do we have to look for? What was the latest numbers of the company regarding sales, returns, investments from inside and outside of the business. If there is some major push of money it is a good sign, why someone will invest some money in a company that is not solid. Look at the 5 years historic review, is there any bad publicity,bad management,complaints, courts judgment… If there is too many bad items in the mix, just run!

What else…

Do you know that once you have a really good portion of stocks,you are entitle for a automated reinvesment strategy that let you reinvest your dividends profits in order to buy more shares.The goal is to have more shares of the company to help you collect even more dividends in a simple fashion way.

Simple…

We should keep it really simple: you buy a share of a company and it will pay you dividend per month or per year.More shares you own ,more dividends you will receive.Buy shares from a trusted company that has a really good reputation.Buy shares from a company that you respect, have knowledge about this is a plus. You have a financial planner , thats good because you already have the basic in hands, so ask a lot of questions and see if it is a good thing to let them deal with your money or it should be you.

At the End…

My only two cents would be: to keep it simple and try as much as possible to control your money ,ask questions, read more on the subject.You will be the one at the end winning the lottery of the dividend challenge.

Happy Investing.

Stanley

Popular posts on Bag of Cents:

Pin103

103 Shares