Did you know that some companies pay cash to the shareholders of their stock so they can share in the profits? Did you know that Exxon/Mobile has been paying money to their stock holders every single year since 1882? This payment comes in the form of Dividends. Would you like to get paid to own stock in some of the greatest companies in the world?
Dividends are a way for companies to share some of their profits with their stockholders. So, when a company makes greater earnings (profits), they may pay you, the investor, an even larger dividend. This is called an “increasing dividend.”
Typically, dividends can vary from 0.3% to over 6% per year. That means if you owned $1,000 worth of Stock A which pays a 5% dividend, you would receive $50 in cash that year from Stock A company. The other benefit to the equation is that the stock price could be increasing as well. That means you could be making money “while you are invested” and also “when you sell your stock shares.”
While neither dividend payments nor an increase in stock prices are guaranteed, dividend stocks are typically classified as larger, older, and more established companies that have been around for many decades. So, when you think of McDonald’s, Lowes, Wal-Mart, Exxon Mobile, and other businesses like those, perhaps there’s a reward in your future to own a piece of their/your profits!
Owning individual stocks takes a more technical and fundamental approach to investing compared to mutual funds or exchange-traded-funds. They can also be much more risky from a “non-diversification” standpoint. If you would like more information on how to integrate “dividends” into your portfolio, give me a call. Building a portfolio with dividend income can help to bolster your returns over the long-term.