Why Investors Love Dividends

21
March

Dividend is part of the money a company makes from trade of stocks and shares that is distributed among shareholders. Investors love dividends because they are assured of returns on their investment. Because of this, many investors will buy stock in companies that are stable just so that they can receive dividends. Most companies are willing and eager to offer the dividends for a number of reasons. First, they do not have better use for the money within the company. Besides buying another company, increasing employee salaries, or buying more stock in the open market, distributing the profits earned seems feasible. Secondly, the company wants to ensure stockholders retain their investment with them. If they receive dividends, they are certain to keep their stock in that company.

Other reasons why investors love dividends include;

• This can be a great source of income. It is usually done quarterly, which means an investor is guaranteed a regular inflow of cash. This is regardless of whether the market is doing well or not. Dividends have to be paid out.

• You do not have to be good in trading. As long as you own a substantial amount of stock, you will receive a portion of the profits. In addition, the stock does not have to rise in value to receive dividends.

• For people who have retired, this is an effective way of making money. It does not require effort or too much time, and you get to enjoy profits, nonetheless.

• Some companies will increase the dividend yearly, which means investors stand to profit each year. They do not have to do anything yet they earn large sums of money with each progressing year.

• Investors who receive dividends tend to some sort of financial consistency. They are of a check throughout the year, which means he does not have to strain financially. If the company is stable and continues to grow yearly, the checks only get more profitable, which is ideal if you intend to save or look into more investments.

• The current economy is demanding and coming across a job that pays well is getting tougher by the day. Dividend-paying stocks more appeal than any other kind of investment. This is the only way to get some form of income from stocks.

crisis that occurred not too long ago saw investors earn millions while other markets were crashing. It is almost unfair that on one spectrum, individuals are living on a bare minimum while on the other end, there is, inexcess. Some investors regard this as intelligent investing and knowing where to put your money. It may seem wiser to invest in other avenues but the keep its current investors happy and content. If the company is already operating at its optimal, it is only fair that it shares the profits with other shareholders. This encourages the workers to be more productive and in turn the company will realize more benefits. Whe an puts his money into a company, his expectation is to get increased returns from that money. If he does not actually have to do anything and still make a profit, there is no reason why he ought not to continue investing. This is the guarantee dividends offer. The investor makes money with little effort, and the company has continuity in its operations and profitable gains.

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

Email  • Google + • Twitter

Comments are closed.