Dividend payments are essential to the relationship between company and investor. There have been cases where company’s stock price plummets where the company aim to reduce or cut off dividends, showing that a stable dividend payout is essential to a company’s financial well-being. Reinvesting dividends can provide current and future income and also could be rewarding to add to your Wealth Creation strategy.
The one attractive strength of dividends is that it is not tied to volatile market changes but rather to the company’s successful profit earnings. Companies have a defensive stance to protect the company wealth.
Below are some truths about Dividends:
• Dividend-paying companies usually announce an interim or annual distribution.
• Dividends can increase (or decrease) over time
• Dividend Investing is not Equivalent to Value Investing (One focuses on capital gain while the other primarily in dividend income.)
• Pay Attention to the Dividend Dates (not buying a stock in time in order to capture the upcoming dividend, or selling too soon and forfeiting the upcoming dividend).
• If dividends are too high it can adversely affect the sustainable growth rate of a company.
• Dividend stocks typically fall less during declining market periods.
Dividend investing potential can be a great addition to your investment strategy, but there are several aspects investors should be aware of before investing in dividend stock and depends greatly on the future of the very company you intend to invest in.
Always speak to a professional before making any financial decisions, they are able to analyse and advise you on your wealth creation strategy.
Edited by N du Preez (Internet Marketing Solutions)
WARNING AND DISCLOSURE:
The content in this article is for general information purposes only and does not refer to specific advice to any particular person’s individual financial objectives or financial needs. Before making any financial decisions contact Ben Charlton or your Financial Planner.
Although every effort has been made to verify the accuracy of the information contained in this material, we disclaim all liability, for any error, inaccuracy in, or omission of the information contained in this material or any loss or damage suffered by any person directly or indirectly through relying on this information alone and not speaking to a qualified Financial Planner.