In love with Dividends
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How do we divide the cake? Let’s talk about dividends! This is the strategy I follow, or at least try. If you see my portfolio, there are many kind of companies and sectors in which I am also looking for stock growth. How are dividends being paid? How often dividends are paid? Why does a company pay dividends? Let’s go and find out!
By the way, today in the morning I woke up and check my account and received the biggest dividend so far. Long life #TWO Happy days!
You can see my previous posts (dividends I & dividends II) and please check this awesome page –> aristocrats dividends if you are looking for passive income in some of the best companies around. Choose wisely!
Disclaimer: Please do follow an investment strategy that won’t keep you awake all day long and stuck to a monitor!
There are many options to choose from when it comes to good dividend companies. The paradox of choice tells us: the more options we have, the less satisfied we become with whatever we choose.
Everything shapes you to be the person you are today. Sometimes hard lessons pay off dividends.Al Jourgensen
Whatever you did, it has helped you to be the person you are nowadays. If you are not satisfied, make a real change, I assure you it will pay off dividends – literally!
Investing in dividends is letting money work for you, which can be used to supplement your salary and other sources of income. Depending on the capital invested, dividend investments can even become your main source of income, bringing you closer to the common dream of financial independence. Remember this is a marathon and not a 100m race!
How often do companies pay dividends?
Some companies pay dividends monthly, others quarterly or annually. A best stocks that pay dividend company may be closer than you think.
Why does a company pay dividends?
The majority of the companies that pay dividends are the ones with a mature business and from my point of view it is safer and better for the company and for stockholders to receive a passive income according to the payout ratio the company is using. Allowing the company to use the residual income to invest back into the company.
You have certainly heard about the importance of diversifying your investments. There’s an old (but still valid) saying that says “don’t put all your eggs in one basket”. It is the smartest strategy to protect our capital when investing.
Which are the best dividend companies?
Try to avoid companies that keep changing from profit to loss year after year, and the ones where the payout ratio is not sustainable.
According to investopedia: The payout ratio is a key financial metric used to determine the sustainability of a company’s dividend payment program. It is the amount of dividends paid to shareholders relative to the total net income of a company. For example, let’s assume Company ABC has earnings per share of $1 and pays dividends per share of $0.60. In this scenario, the payout ratio would be 60% (0.6 / 1). Let’s further assume that Company XYZ has earnings per share of $2 and dividends per share of $1.50. In this scenario, the payout ratio is 75% (1.5 / 2). Comparatively speaking, Company ABC pays out a smaller percentage of its earnings to shareholders as dividends, giving it a more sustainable payout ratio than Company XYZ.
Another very important point is diversification and rebalance of the portfolio. If you choose strong companies, it is quite unlikely you will need to sell the stock anytime soon. Also, if the company pays monthly dividends or quarterly dividends steadily, there is no reason to sell.
In my next post, I will give you an update on my portfolio. I can tell you that this month has been the one I invested the most and I love it
If you are not sure in which company you should invest in, there are many indexes funds or ETFs that can help you with this task. The main difference is that index funds are mutual funds and ETFs are traded like stocks.
To Download the excel file I use to keep track of my investments. You just need, to make a copy of the file and it is all yours, I hope you give it a good use, same as I do.
For my following entries, I will share with you the meaning of the different dividend dates, the dividends aristocrat, Indexes, how to safe money and much more. Stay tuned and follow the blog!
If you have time, check my other posts and let me know if you have done something similar.
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