Introduction to Dividends

introduction_dividends

Are you interested in the legal version of “printing your own money?” If no, maybe you can find a new hobby on Pinterest. 🙂 If yes, you will want to invest at least part of your portfolio in dividend-paying stocks or mutual funds! It took me a little time to “clue in” on the awesome wealth-building power of steady dividends, but when I did I, I really couldn’t believe it.

Owning shares of publicly-traded companies that pay dividends is like sharing in the company profits! Normally paid to shareholders every 3 months, and almost always paid in cash, dividends are like getting free money every quarter of the year, year after year after year…

Note: Some mature, profitable and well-established companies have not missed a dividend payment to shareholders in their entire company history – 50, 60, even 100+ years! (Think Canada’s big banks… for example)

Note: I have read about some very seasoned and experienced investors who will not invest in a company stock unless it pays a steady, regular dividend. I like it!

Stock dividends are normally paid on a “per share basis.” I.E. ) 42 cents per share, or $1.02 per share etc. So, it makes sense the more shares you own, the larger your quarterly dividend. Even better, you can decide to take your dividend in cash or re-invest it in more shares. If you re-invest your dividends (DRIP – dividend re-investment plan), you do not pay a commission on the additional “free” shares you accumulate. I think it was Kramer from Seinfeld who said, “that’s some sweet action!”

Here is a simple illustration: If you own 500 shares of XYZ Company and the board of directors declares a quarterly dividend of 41 cents per share payable on a certain date in the near future, then you can expect to receive a $205.00 dividend! Definition: Easy money. 🙂

There is so much more to say! Keep following my “money making blog” to learn more about the “exponential” wealth-building power of stock and mutual fund dividends.

 

Introduction to Dividends

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