Who pays more dividends, Apple or IBM?
This month I would like to discuss the importance of dividend yield. The dividend yield determines how much you can earn. At the end of the day our focus is more on income generation than on individual stock prices.
A dividend is money that you receive from a company, just for owning their shares. For example, if a company is paying a $1/share dividend and you own 1000 shares, you will receive $1000 for as long as you own those shares and as long as the company continues to pay the dividend. The dividend gets deposited automatically into your trading account, you can spend the dividend if you wish or re-invest it into more dividend paying stocks.
The dividend yield tells you the return on your investment as you hold on to your shares, regardless of the stock price, you will continue to receive dividends from the company as long as:
- you continue to remain a shareholder
- the company continues to pay the dividend
- Why are dividends important, they seem so insignificant (Apple's dividend is only $0.82 a share)?
- Dividends are not guaranteed, so how do I know I'll get paid?
- What happens to the dividend when the stock price drops?
I can help you to start investing today, why re-invent the wheel when you can learn from my 20-years of being in the stock market. I've witnessed first hand the ups and downs of the market, and I know what it's like to start investing your hard earned money. I created the 12 Rule of Simply Investing to help you get started right away, so you don't have to wait on the sidelines any longer. The sooner you start investing the sooner you will be on your path to financial freedom.
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