Personal Finance News, Investing Advice, Business Forecasts
That's not a bad thing. You can just buy your shares right from the company. By pleasing shareholders, dividends can be used to justify bonuses and fend off rebellions over high executive pay. Other companies like Bethlehem Steel, General Motors, US Steel, Goodyear Tire and many others paid dividends for nearly a century before eventually filing for bankruptcy.
You had two options: find a stock that pays seven per cent - and probably carries significant business risk if it trades at that price - or you could accept Hansen's four per cent yield and then sell three per cent of your holding each year. If your business has the possibility of going onto the stock exchange later on, and investors can share in dividends, this is very important for them to know from reading your proposal.
Of course, it's worth noting that investing in dividends is not as easy as picking some stocks with high dividend yields and waiting for huge quarterly payments to roll in. Instead, there are many factors you need to evaluate before choosing the right dividend-paying stocks for your portfolio.
This means that buy-and-hold investors can be rewarded over time rather than having to cash out of a position. When a company can keep its dividends steady, it may be signaling that it is managed more deftly and stock market more conservatively than its peers. If you have long-term investments in broad index funds, and not in individual stocks, you don't need to worry so much about particular companies, and even if dividend cuts portend market declines, you can prosper if you can endure some pain.
Because it's a good way to get a handle on the cash generated by the business after adjusting for the cost needed for ongoing investments. Trust dividends ultimately depend on the income being paid by their underlying investments. I try to avoid selling any company regardless how far the stock price falls.
When choosing companies for their dividend payouts, it's important to consider more than the flashy exterior. This is similar to tax gain harvesting except you use the proceeds to live rather than to buy shares of a similar fund. When you understand how a business makes money and how you can get your money back from an investment, this is usually a good sign that you are able to assess the risk attached to your investment.
A better question to ask is: Where is my portfolio's income heading?†If you own high-quality companies that raise their dividends regularly, your income should continue to grow - during bull markets, bear markets and sideways markets. High dividend Stocks can and do go down.