Investing For Dividends

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Investing For Dividends Powered By Docstoc
					Presented by Daniel Toriola
Choosing the right Stock is a very complicated process and investors have different approaches. However, it is wise to follow general steps to minimize the risk of the investments. Click here to know more

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Investing For Dividends By Bob Munroe

When most people think about stocks and shares, they tend start out with the idea that you try and buy stocks that are cheap, and then sell them later on when they are more expensive. However, this isn’t the only way to invest and make money from stocks. Today, more and more people are starting to focus on dividends, both as an investment strategy, and also a way of obtaining a steady passive income. Up until its climax in the dot-com crash of 2001, the prevailing strategy for most stock market funds and individual investors has been to target “growth”, that is, to buy companies that are predicted to grow their earnings faster than the market average. The alterative was “value” investing, where shares are bought based on the idea that companies are “undervalued” due, perhaps to short-term problems or modest growth prospects. Both of these strategies, however, depend on selling a stock at some later date for more than was initially paid for it. Contrast this to the position of a small business owner, perhaps of a flower shop or restaurant. They will receive money regularly in the form of profits and perhaps be able to live very well off this income alone for most of their lives. In principal, an investor who owns shares in a profitable company is no different than the owner of a profitable shop. True, there are many shareholders to divide the profits amongst, but then McDonalds has a lot more than 1 store! The fact is that most companies do pay their profits out to shareholders, but few investors pay much attention to them, instead focusing only on the share price. In part this is because most popular growth stocks have low or even no dividends, their price based on future predicted earnings. It doesn’t have to be this way though, there are plenty of large companies available that have long histories of paying out a steadily rising divided to shareholders. Dividend yields (the yearly dividend payout as a percentage of the cost of the share) are available for many large, stable companies at more than 5%, far more than you can make from most savings accounts. Investing for dividends is a strategy with numerous advantages. The most obvious is that a portfolio full of high-yield companies will be paying you money every year, money that you can either re-invest in more shares, or use to cover unforeseen expenses. This has the additional advantage of reducing the need to sell shares if you require cash, which can be very helpful if current market prices are depressed, as they are currently.
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Presented by Daniel Toriola

Also, in most countries, dividends are treated more favourably than other forms of income, often because a company will have already paid tax on its profits before it distributes the remaining money to shareholders. Finally, it’s possible to never actually have to sell your shares, after all, why sell something that pays you a steady amount of money every year? Certainly you will often be able to get away with less buying and selling than other investment strategies, which can significantly reduce brokerage costs. For some investors, the income from dividends can be all the income they need, allowing them to retire early, or work part time, and even if your portfolio never becomes quite that large, the regular dividend payments can act as a powerful incentive to keep investing whatever the economic conditions. Visit http://www.easy-finance-4u.co.uk for further information about styles of investing and other financial advice.

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Stock Market For Beginners - Types Of Investment Processes By Arkaitz Arteaga

A stock is the number of shares of a company. This means if you buy a share of the stock, then you are the part owner of the company and all its net assets. You are entitled to part of the profits generated by the company which when paid to you is called dividend. The stock market is the place from where you buy such stocks. These days due to the power of internet you can buy part ownership in companies from home itself. The main advantage of investing in stocks of companies is that you can grow your money and become financially wealthy. If you are a beginner, then you should get the requisite training so that you feel secure, knowledge wise, about investing in stocks. If you have heard your friends or office colleagues saying that they lost a lot of money in the stock market, then you must also understand that this is because of lack of knowledge. When you know what you are doing and you are able to analyze your potential investments thoroughly before taking a decision, then your risk factor has considerably minimized. The long term average annual return calculated for a period of 75 years has been found to be 11% when you invest your money in the stock market. If this return is achieved when you invest $500 in a portfolio of stocks and you do not tinker with it, then you will have $1,000,000 in your account after 28 years. This is also known as the power of compounding. If you earn of return of 15% annually for five years, then you can double your money invested. This is certainly not a bad way to earn money. This of course requires discipline from you and you should be able to take rational and logical decisions and not let emotions enter your though process. You should be able to justify your purchase of a particular stock yourself. This is the level of understanding you require before venturing to invest. There are types of investment processes people practise. These are value investing, income investing and growth investing. In value investing, investors look for stocks that are selling at a price which is lesser than the value of the business. In income investing, investors look for regular dividends which are high as well. All the companies do not pay high dividends. Some companies, that have a lot of cash in its books, do not find great investment opportunities. These companies return the excess cash to the shareholders in the form of high dividends. These are the type of companies that income investors look for. Then there are the growth investors who look for companies that are growing at an incredible pace. These are typically new businesses whose products show a lot of potential and are gaining popularity amongst the consumers. Stock market is lucrative and there are several types of players in it. If you have a regular job, then you can invest part of your savings in the market and work towards growing your wealth. You should put in effort to learn all about the stock market and it’s working. Arkaitz Arteaga - http://marketstock.netFor more information about Stock Market visit http://marketstock.net/category/stockmarket

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