Therefore, after you’ve grown your trading account as high as you can take it - perhaps you’ll choose to put the rest into dividend stocks. We’d be a rotting carcass by the side of the road. And that’s good.īecause if there were profitable opportunities to trade penny stocks with billions of dollars, the hedge funds and Wall Street suits would be all over them. Yet, there’s a limit to how much money you can use to trade penny stocks. You also need to pay taxes on your capital gains and live a comfortable lifestyle. When you begin trading penny stocks, you want to scale up your trading account. Some say that If everybody in this country invested every dime they could in dividend stocks, we wouldn’t need Social Security … what do you think? When It Happens The ability to pay all your living expenses with the dividends you receive? That, my friends, can be called “F-U” money. Here’s a gruesome example: If you went into a coma the next day, that money would keep hitting your bank account every quarter. Sooner or later, the dividend income can grow high enough to live on. Some people choose to stash some of their trading profits into buying the stock of companies that pay dividends.Īs they receive dividend checks every quarter or month, they reinvest that into more dividend paying shares of stock. What is Dividend Investing? © Millionaire Media, LLC Paying dividends requires real, cold hard cash in the bank to back up the checks.Īlso, sending cash out to shareholders helps prevent management from using it for risky mergers and acquisitions.ĭividends are the ultimate make-money-while-you-sleep, residual income. Those companies were fooling people with smoke and mirrors. None of those accounting fraud cases declared regular dividends. Way back in the early 2000s, a lot of companies got caught cooking their books.Įnron was the biggest and most famous, but many people also lost the money they invested in Worldcom and Tyco. That’s the idea.ĭividends are also a form of protection against accounting fraud. So you begin getting an immediate return on your investment, and continue to collect checks … hopefully for the rest of your life. To make their stock attractive to investors who buy stocks for the long run, they pay dividends. Therefore, they’re no longer growth stocks that attract traders eager for big, fast gains. They make more in profits than they can reinvest in their core businesses. Usually, companies that pay dividends are older and more mature. Sometimes companies declare special one-time dividend payouts. However, Kiplinger found 16 good ones that pay monthly. The board of directors decides how much money the company can spare, and declares it will send shareholders so much per share.įor American companies, that’s usually once every quarter. Dump any dividend stock if the checks stop arriving.ĭividends are cash a company sends out to its common stock shareholders. Unless, that is, they stop paying you dividends.
You don’t trade them - you own them for life. 3.4 Examples of Long Term Dividend Stocksĭividend stocks are the opposite of penny stocks.3.3 Examples of Affordable Stocks that Pay Dividends.1.3 Advantages of Buying Dividend Stocks.
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