Welcome to Scribd, the world's digital library. Read, publish, and share books and documents. See more
Download
Standard view
Full view
of .
Save to My Library
Look up keyword
Like this
1Activity
0 of .
Results for:
No results containing your search query
P. 1
4 Rules to Consider Before Investing in Dividend Paying Stocks

4 Rules to Consider Before Investing in Dividend Paying Stocks

Ratings: (0)|Views: 184|Likes:
Published by Susan
Investing
Investing

More info:

Published by: Susan on Apr 28, 2013
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

04/28/2013

pdf

text

original

 
School Shooter Laughs, InsultsFamilies at SentencingUCF Gunman's To-Do List EndedWith 'Give 'Em Hell'Selena Gomez Made Bieber CryUS Contractor AllegedlyCompromised Nuclear SecretsArias 'Killing' Travis Again WithLies, Friend Says
HOME
>
MONEY
Dividends: Take the Money and Run
52ShareText Size
-+
3ShareShare
Email4 CommentsPrintSingle Page
In investing, there are precious few universal truths. One of them is thatcompanies that consistently pay dividends are good investments.There is no more reliable way to get consistent returns on yourinvestment dollars than using a well-thought-out long-term dividendstrategy.Dividendsare a portion of a company's earnings for the quarteror the year that is distributed to shareholders.
Read more:The 10 Largest Fiscal Cliff Dividend Tax Winners
The benefits of dividends are well documented. Studies show that about40 percent of the stock market's total returns since 1930 have come fromdividends. Also, buying dividend-paying stocks tends to provide a cushionagainst volatility (ups and downs in the market). A dividend strategy is a slow but steady way to win the long-terminvesting race — a race in which many non-dividend-paying companieslag behind or fail to finish.
Read more: What the Average American Should Know Aboutthe Capital Gains Tax
Rules to help increase your dividends
(Getty Images)
Recommend22
/
Column ByTED SCHWARTZJan. 22, 2013
MOST RECENTMOST POPULAR
HOT TOPICS:
Jodi Arias
TJ Lane
Jason Molina Dies
 
Search
HomeU.S.WorldPoliticsVideoInvestigativeHealthEntertainmentMoneyTechTravel
 
4 Rules to Consider Before Investing in Dividend Paying Stocks...http://abcnews.go.com/Business/rules-investing-dividend-paying...1 of 53/21/13 9:34 PM
 
25,000 U.S. Deaths Tied to SugaryDrinksTeen Gets Food Allergy BillPassed for Younger Sister Fishermen Hook a Great WhiteSharkWas Lil' Wayne 'Sippin Syrup'?Psychologist Admits Arias Lied toHimNorth Korea Eyed in Cyber Attack
4 minutes ago
Moms on Xanax: Women Say Antidepressants,Anti-Anxiety Meds...
14 minutes ago
A Pathway By Any Other Name…
14 minutes ago
"Travel Confidential" on "20/20 Saturday" AiringSaturday,...
14 minutes ago
CVS Requires Employees toReport Weight for Insurance
21 minutes ago
Katy Perry and Mayer Split ...Again
39 minutes ago
Mouth-Birthing FrogResurrected?
1 hour, 5 minutes ago
Too many investors, focused on the more speculative returns from shareprice appreciation, overlook returns from dividends, which are virtually assured each year by companies with long dividend-paying records.Dividends are a key part of what investment analysts calltotal investmentreturn– the money you ultimately make on your portfolio by differentmeasures. Whether a company pays dividends for a given period is up to thediscretion of the board of directors. Stocks that consistently pay dividendstend to be those of mature companies that don't necessarily need to retainearnings to pay for additional plants, equipment and people.The great thing about dividends is that they are cash in your pocket, and you can decide what to do with it, as opposed to letting boards of directorsuse the money to pay outsize bonuses to CEOs. Further, even highly successful, mature companies sometimes get lured into mergers andacquisitions that may not work out. So instead of reinvesting dividends,it's a good idea to just take the cash and keep it. This way, if badmanagement decisions cause the stock price to fall, your total returndoesn't take as big a hit.Dividends allow investors to get cash out of the market without sellingstock and incurring nettlesome trading costs. This is particularly attractive during retirement, when seniors want to hold on to their stocksso they don't outlive their assets. When comparing dividend payers with non-payers, consider companies'potential uses of their earnings:1) Buying back shares from investors. Buybacks can be beneficial toshareholders, but their effects aren't immediately clear. Dividendsamount to certainty.2) Investing in expansion, including the purchase of other companies. Theproblem with this is that even great companies sometimes makeregrettable decisions. For example, Microsoft bought Expedia, only to sellit at a loss.3) Holding on to a lot of cash, à la Apple, which has done so for decades.The company didn't announce its first dividend until March 2012.4) Distributing cash from earnings by paying dividends to shareholders.Bingo.Of course, just because a company is paying dividends, this doesn't meanthat you should necessarily invest in it. Here are some rules of the roadfor evaluating dividend payers:• Seek dividends; don't chase them. Sometimes companies declaredividends just to get more investors now and boost share price in theshort run. But down the road, investors drawn in by this may regret buying because the market punishes companies for decreasing dividendsor paying them inconsistently. When companies pay a lower dividend or skip a year, this can affect thestock's value. So investigate whether the company can afford to continuepaying dividends. Is the company amply covering its dividends withprofits? What is its growth rate? Is this rate rapid enough now, and based
4 Rules to Consider Before Investing in Dividend Paying Stocks...http://abcnews.go.com/Business/rules-investing-dividend-paying...2 of 53/21/13 9:34 PM
 
'Millionaire Matchmaker': 5 Mistakes to Avoid on aFirst...
1 hour, 5 minutes ago
5 Things to Know This Morning
2 hours, 50 minutes ago
How Healthy Is Your County?
3 hours, 12 minutes ago
3 Best Dividend Picks
Only 3 types of dividend stocks are even worthlooking at in 2013MoneyMorning.com/Dividend_Stocks
Mortgage Rates Hit 2.50%
White House Program Cuts Up to $1k off MonthlyPayments! (2.90% APR)www.SeeRefinanceRates.com
This Stock Will Explode
You Need to Know About this Next AwesomePenny Stock! Read More.PennyStockCircle.com
Retire on These 4 Plays?
Our gurus pick their top dividend plays for 2013www.dailygainsletter.com/dividends
FROM AROUND THE WEB
11 Foods You Can't Buy AnywhereAnymore 
(The Fiscal Times)
6 Ways To Ruin Your Retirement
(Investopedia)
8 Jobs You'll Love That Pay $50,000 a Year  
(Salary.com)
How the Fiscal Cliff Deal AffectsEstate Planning 
(U.S. Trust)
What Makes ETFs Tax Efficient?
(Charles Schwab)
MORE FROM ABC NEWS
Gamblers Pick Super Bowl FavoriteSuper Bowl 2013 Ticket Mania KicksOff What to Know About Capital GainsTax Your 401(k): Why You Can't Go ItAlone
RELATED TOPICS:
Stocks,Coca-Cola,Capital Gains,Hormel Foods,Colgate-Palmolive,  Apple Computer ,Microsoft,Health Care,Personal Finance,Stock Market
Follow @abc
on Twitter, become a fan onFacebook
2013 Best Dividend Stocks
3 stocks that defy Bernanke's zero- interest world and deliver cashMoneyMorning.com/Dividend_Stocks
AVTC - 5-Star Rated Stock
One of the fastest growing companies in America. Learn more-freereporthttp://www.irconsultingpros.com/
dividend paying stocks
Free Insider Advice: Our Ten Must-Buy Dividend Stocks of 2013!www.dividendsandincomedaily.com
EmailPrint
Comment & Contribute
Do you have more information about this topic? If so, pleaseclick hereto contact the editors of ABCNews.
 
More From ABC News
 
From Around the Web
on competitive advantages that are promising enough, to assure dividend-generating earnings in the future?
12 
|
NEXT PAGE
'Preachers' Daughters'Tackles ControversialIssues'Preacher's Daughters':Drugs, Partying and TeenMotherhoodFox News ExecutiveMissing, Now BelievedMurderedWells Fargo's New Planfor Homeownership
(YouTube)
Close to Retirement?Don't Miss these Datesand Deadlines!
 
(CharlesSchwab)
State Property Taxes:Where Does Your StateRank?
 
(DexKnows)
Recommend22
Share
 You Might Also Like...Photo Galleries
•••••
 ABC News Full Episodes
View:
Guns Replaced With Thumbs in MoviePosters
Entertainment
4 Rules to Consider Before Investing in Dividend Paying Stocks...http://abcnews.go.com/Business/rules-investing-dividend-paying...3 of 53/21/13 9:34 PM

You're Reading a Free Preview

Download
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->