Dividends
Dividends are a very powerful aspect of investing that are often overlooked.
What is a dividend?
When a company makes a profit on their goods, the must decide what to do with it. If they decide to reinvest in their cmopany to research new products/open new stores etc...that is called retained earnings. Or, they can decide to reward shareholders of their company with a dividend. A dividend is a cash payment that is paid based on the number of shares that you own. Most companies will only pay out dividends if the cannot see a better place to invest their money. For this reason, dividends are usually paid out by large companies that have an established market share and do not have large annual costs for research and development or product restructuring.
Some of the most famous examples of a dividend stocks include Altria and Coca-Cola. The most famous large company to NOT pay dividends is Berkshire Hathaway. Berkshire Hathaway has always had better places to invest their money and for this reason, Warren Buffet has not seen any reason to pay a dividend on the stock because there are better places (with higher returns) to invest the money.
I got paid my first 2007 dividends yesterday. Each of these dividends is reinvested and are acccounted for as assets in taxable accounts.
Value of holding Dividend
(% of mthly income) (% of mthly income)
Spain Fund: 49% 0.35%
Korea Fund: 22% 0.15%
Wal-Mart: 22% 0.08%
TOTAL: 92.75% .057%
Not bad...an extra 0.57% of monthly income for January 2007 just for holding dividend investments. It may not look like much now...but that extra .57% of my income was reinvested in those stocks...and by the time I'm actually up and running, they should be providing me with a decent amount of income...along with the other dividend stocks that I will accumulate.
If you have a little extra money saved...check out a few dividend stocks...I doubt you will be sorry.
Until next time,
Thor
Helpful Links:
http://en.wikipedia.org/wiki/Dividend
http://www.winninginvesting.com/dividends_plus_appreciation.htm
http://moneycentral.msn.com/content/P101819.asp
http://www.businessweek.com/bwdaily/dnflash/feb2005/nf20050222_6434_db014.htm
Retained Earnings:
http://en.wikipedia.org/wiki/Retained_earnings
What is a dividend?
When a company makes a profit on their goods, the must decide what to do with it. If they decide to reinvest in their cmopany to research new products/open new stores etc...that is called retained earnings. Or, they can decide to reward shareholders of their company with a dividend. A dividend is a cash payment that is paid based on the number of shares that you own. Most companies will only pay out dividends if the cannot see a better place to invest their money. For this reason, dividends are usually paid out by large companies that have an established market share and do not have large annual costs for research and development or product restructuring.
Some of the most famous examples of a dividend stocks include Altria and Coca-Cola. The most famous large company to NOT pay dividends is Berkshire Hathaway. Berkshire Hathaway has always had better places to invest their money and for this reason, Warren Buffet has not seen any reason to pay a dividend on the stock because there are better places (with higher returns) to invest the money.
I got paid my first 2007 dividends yesterday. Each of these dividends is reinvested and are acccounted for as assets in taxable accounts.
Value of holding Dividend
(% of mthly income) (% of mthly income)
Spain Fund: 49% 0.35%
Korea Fund: 22% 0.15%
Wal-Mart: 22% 0.08%
TOTAL: 92.75% .057%
Not bad...an extra 0.57% of monthly income for January 2007 just for holding dividend investments. It may not look like much now...but that extra .57% of my income was reinvested in those stocks...and by the time I'm actually up and running, they should be providing me with a decent amount of income...along with the other dividend stocks that I will accumulate.
If you have a little extra money saved...check out a few dividend stocks...I doubt you will be sorry.
Until next time,
Thor
Helpful Links:
http://en.wikipedia.org/wiki/Dividend
http://www.winninginvesting.com/dividends_plus_appreciation.htm
http://moneycentral.msn.com/content/P101819.asp
http://www.businessweek.com/bwdaily/dnflash/feb2005/nf20050222_6434_db014.htm
Retained Earnings:
http://en.wikipedia.org/wiki/Retained_earnings
posted by Thor @ 5:18 AM
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