dividends

The disadvantages of dividend stocks

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Investing in dividend stocks is a popular strategy with investors as it provides regular income and is thought of as being less volatile than growth stocks. However, there are also several disadvantages to consider: Lower Growth Potential Dividend-paying companies typically distribute a portion of their earnings to shareholders as dividends. This means they may have less capital available for reinvestment in business expansion or innovation compared to companies that retain all earnings for growth. As a result, dividend stocks may …

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10 Common questions about dividends

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These are the top 10 questions commonly asked about dividends. 1.Why do companies pay dividends? Companies decide to pay dividends to investors out of their excess earnings as a way to reward them. Companies need to be making money to be able to pay dividends. So generally speaking, firms that can pay dividends are in a financial stable position. 2.Are dividends compulsory for companies? No, dividend payouts are not mandatory for companies. Some growth companies may decide to not pay …

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What is a DRP?

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The share market is full of jargon which may not be familiar to the new investor. A term which is used frequently is DRP. This acronym means “Dividend Reinvestment Plan”. In this article we discuss the reasons why investors may want to take it up, and the potential downsides. Definition of dividend reinvestment plan Companies can pay their dividends to entitled stock holders through stock as opposed to cash. Some companies may offer DRP shares at a discount to market …

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The top 10 things you need to know about dividends

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The world of dividends can become confusing for the investor if they are not familiar with the all jargon. These are the top 10 questions commonly asked about dividends. Why do companies pay dividends? Companies decide to pay dividends to investors out of their excess earnings as a way to reward them. Companies need to be making money to be able to pay dividends. So generally speaking, firms that can pay dividends are in a financial stable position. Are dividends …

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Investing for income? You are doing it all wrong

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Many share investors are looking for yield. They need dividends to live off. However, many income investors are left frustrated by their share portfolios. Why? Because most investors looking for dividends go straight to the same sorts of stocks, Banks, Telstra, Wesfarmers, etc. Whilst they pay a great yield today, nothing much changes over time. However if you are in it for the long term, there are other ways to generate dividends in the future. Growth shares have typically been …

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