Advantages of Buying Dividend Stocks
When you are looking for the best available options to invest your money, you should consider buying dividend stocks due to the many benefits that can be gained.
Two Ways to Come Out Ahead
One of the main advantages attached with
dividend stocks are the two ways that you can improve your portfolio’s performance. You do well if the share value increases or when you get a dividend payout directly from the company. For example, if the value of the stock goes up by 3% due to share price increase, you will also earn an additional return on your capital when the company pays you a 4% dividend. This means that your total return is 7%. The investor should pay great emphasis on dividend history and be convinced the company can continue to generate the cash flow necessary to make the dividend payments
Hedge Your Bet
If the share price value falls by 5 percent and you get paid a 4 percent dividend by the company, you are only being exposed to an actual loss of 1 percent. By hedging your bet you will sustain much less loss over time. Dividends support the share price of a company as it increases the demand of a stock if they are paying dividend. For income investors — particularly those nearing retirement — dividend stocks have always been an important part of their portfolios. Dividend stocks boast the benefit of providing reliable payments that can be reinvested, and many top dividend stocks — particularly utilities — are mature and stable, so they and offer a hedge of protection in times of volatility.
Steady Stream of Cash
Regular cash dividends are those paid out of a company’s profits to the owners of the business (i.e., the shareholders).Various stocks do not actually yield a profit until you sell. This means that you can’t get access to cash until the stock is sold. However, dividend stocks are much different and the companies will pay your dividend earnings in actual cash that you can get access to once the dividend is paid. More and more people are relying on stock dividends as steady stream of income. If the dividends are fully franked it’s even better. In addition to regular dividends, there are times a company may pay a special one-time dividend. These are rare and can occur for a variety of reasons such as a major litigation win, the sale of a business or liquidation of an investment.
One dividend stock on which we have recently put a BUY :-
Coca-Cola Amatil
Disclaimer
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people.
Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376).
The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation.
Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product.
The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide.