Saturday 15 October 2016

Why You Need To Understand The Dividend Yield And How It May Affect Your Returns

By Helen Cox


Even though it is not the ideal practice to judge a company based on its past activities, considering the company's background of dividend stocks payout can be very beneficial. If after examining a company's background and you realize that they are consistent in paying out dividend stocks, much dividend can be earned in investing in that company. You can choose to review the payouts of a company dating back four years or more and get a clear picture of its dividend yield Florida before investing.

Yield on dividend is calculated as annual dividends per share/price per share. It makes intuitive sense that investing in stocks of companies paying out more in dividends should give higher returns on average than those of companies with lower returns. Even if the stock price itself were to stay the same over a one year period, an investor would still receive a return in the form of the returns.

Generally, people would opt for growth stocks. Many would believe dividend stocks are too boring and that they offer no chance of becoming a millionaire. However, this is untrue. The dividend stocks should be considered one of the best way to achieve substantial and sustainable wealth appreciation. That was why many website details the phrase, the magic of yeild. It is really a magic in the investing world.

It is a simple fact, no sales equals no income, no income equals no profits. Therefore, without profits means dividends cannot be paid. As an investor, you need to check whether the sales of your company are increasing. The better the growth rate of sales, the better for your investment as this will lead to more profits which can be paid out as dividends which will lead to your financial freedom. Please check the trend of the sales of your prospective company before investing.

Before making any investment in stocks, the first vital factor that needs to be considered is whether or not the company pays in dividends. This needs to be done since not all stocks are returned in dividends. There are some companies that allow you to invest in stocks but do not pay out a return. In order to ascertain whether or not a stock pays returns, an investor can consult Wall Street Journal. In addition, the investor can sign up for an account online to watch stocks that are dividend payable.

Considering a company that offers a return of 10%. Assuming the current price is $10 per share and the company is financially strong. When the stock market collapses, and the price falls to $6 you buy. Since the company is financially strong, it does not collapse in recession and the company's revenue was merely affected.

As such, this company can still offer the same amount of return, 50 cents. However, your yeild would now be different. Since you bought the shares again when it was at $6, your average cost would now be $8. After some calculations, your return would be about 6.25%. Also, since this company is financially strong, the stock price would regain its price of $10 or it may even go higher. As a result, you get stable return which can rise, stable value appreciation and low risk.

They are closely watched and reported making information easy to obtain. Once patterns have been established any changes are instantly reported. Over time you will be able to make a transition from paycheck from working hard to dividend paycheck which will give you the financial freedom to when you want and not because you have to. The Florida fiancial experts will offer more detailed advise on this subject.




About the Author:



No comments:

Post a Comment