Dividend Paying Stocks And Why You Should Be Using Them

Dividend Yield

Understanding how to compare dividend-paying firms can let us see how dividends can help us increase our returns. A high dividend yield is commonly thought to be the most important metric; however, a yield that is significantly higher than that of other stocks in an industry may mean a depressed price rather than a good dividend (dividend yield = annual dividends per share/price per share). As a result of the falling stock price, a dividend cut or the elimination of the dividend may be on the horizon.

The most significant indicator of dividend power is not a high dividend yield, but rather a high company performance,

which you can learn about by looking at its dividend history, which should grow over time. Looking for such companies can be very rewarding if you are a long-term investor.

Dividend Payout Ratio

The dividend is a very important metric. if a company’s dividend payout ratio remains constant, say at 4%, the company expands, the 4% represents a greater and larger sum. (For example, 4% of $40, which equals $1.60, is higher than 4% of $20, which equals 80 cents.)

Special Considerations

Dividends alone would have earned you a 48 per cent annual return on your initial investment by 2004!

Final Thoughts

Many people don’t look at dividends the way they should be. A lot of the time they are viewed just as a nice bonus on the massive return you will make. But seeing your dividend payouts compound over time can be a nice sight indeed!

  • Dividend yield and dividend payout ratio are two important metrics to consider for investors.
  • Dividend ratios normally growl slowly. But often investors still rely on them
  • When it comes to reinvesting dividends, the power of compounding can be a very profitable technique.

When taking dividends into consideration the investor is thinking for the loin-term. Dividends are one of many bonuses to think about when investing long-term but there are many more. Take a look.

Share on facebook
Share on twitter
Share on linkedin

Related Articles

Making money online

Business Mode

All About creating success

We by Business Mode strive to deliver the information you need to start your own success. If its Investing, starting a Business or just creating a side hustle. We got your back.

Business Mode

Favoirites
Sponsor

Make Money Online

Explore