Giovanni Rigters - Dividend Investing for Beginners & Dummies

DIVIDENDS INVESTMENT FOR BEGINNERS & DUMMIES

By Giovanni Rigters

Copyright 2020 All rights reserved

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P lease note that the information contained within this document is for educational and entertainment purposes only. Every attempt has been made to provide accurate, up to date and reliable information. No warranties of any kind are expressed or implied. Readers acknowledge that the author is not engaging the rendering of legal, financial, medical or professional advice. The content of this book has been derived from various sources. Please consult a licensed professional before attempting any techniques outlined in this book.

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Introduction

T he biggest selling point that dividends have as a form of financial security is their reliability. Most people don't want to invest in financial securities because they are risk-averse, and the unpredictability of the market can be discouraging for first-time investors. Investing in dividends will ensure that you don't have to invest a lot of cash and wait a long time to see any returns.

Instead, what you will get is a steady stream of income. Not just this, but the income that you receive can be reinvested in the market, and you gradually can build a portfolio of different investments to ensure that you aren't susceptible to the fluctuations in the market.

The companies you will invest in are also ones with established and highly effective proven business models that ensure that the company will be able to make it through tough times, even in a recession. These are organizations which usually conduct their business worldwide, many of these dividend paying companies also have the potential to increase their dividends every year. If you do a little research, you will be able to quantify the steady rise in dividends that these companies have given to their investors.

It's also important to remember that when you start investing, you have to make sure that you have some basic knowledge of investment and market functioning as well as being aware of its terminology. This book will explain the basic idea behind dividends, financial securities, markets, terminology, and procedures for setting up your investment structure.

We will also look into the advanced strategies of dividend investing to maximize the returns from your investments using different techniques, tricks, and tips.

This book aims to familiarize you with the world of stock market investing and explains how it is a world unto itself and hence, follows its own rules. Once you get the basic essence of these markets, you just have to learn about how dividends can play a pivotal part in your investment portfolio.

Chapter 1: Dividend Investing

I nvesting in dividend stocks can be right if you are looking for an investment that provides a regular income. Dividend-paying companies regularly distribute a percentage of their profits to investors. Moreover, many dividend stocks in the US are paying investors a fixed amount every quarter, while other companies increase their payouts over time.

Some Companies Pay Dividends, Others Dont

There are several reasons why a company may choose to pass some of its profits as dividends, and another set of reasons why some companies prefer not to issue dividends and instead use all the earnings for growth.

For a stable company with regular earnings that doesnt require reinvestments, dividend payouts can be a good idea because:

• Many investors see dividend payouts as an indicator that the company is strong. It is also a sign that the company has positive projections for earnings in the future that makes the stock more enticing. Remember, higher demand for a company stock will boost its price.
• Many investors are looking for a steady income linked with dividends, so they will be more likely to purchase the companys stocks.

On the other hand, some companies choose not to issue dividends because of the following reasons:

• Startup companies that are rapidly growing will not issue dividends because they need to invest as much as possible into their growth.
• Established companies also choose not to issue dividends if its directors believe it will do a better job of increasing its share price through reinvestment.
• Some companies temporarily suspend dividends to begin a new project, buy out another company, or repurchase some of their shares.
• Companies that choose to reinvest all their profits, rather than issuing dividends may also think about the expensive cost of new stock issuance. To stay away from raising funds through this channel, they decide to keep the profits.
• The decision to begin paying dividends or to increase a current dividend rate is a huge business decision. Firms that will suddenly cancel or even reduce their current dividend payout could be viewed unfavorably, and the share price may decrease as a result.

US companies that historically decided not to pay dividends include Tesla, Amazon, Alphabet, and Facebook.