Dividends and Making Money
The business of investing is for realizing profits. Stocks generate profits by way of dividends. Dividends are amounts of profit that companies generate and distribute amongst its shareholders from time to time when profits have been realized. Investors of dividends make money through the business of buying shares in companies earning huge profits and returning a huge amount of the profits to the shareholders. Dividends serve as a way of assessing how shareholders stocks are fairing, the more the dividend the better the company is seen to be performing in the market.
Making money through dividends
Dividends are the profits generated by a company and distributed to the shareholders of the company, after deducting profits to be reinvested and money to pay debts and repurchase stock. Making money from your dividend investments requires one to identify companies which have high chances of increasing profits on a regular basis. This dividend translates into more profits for an investor. Money made from dividends can become reinvested to buy more shares. Dividend stocks of companies with good quality trading attract more dividends, earning more profit for you.
Dividends are mostly paid in cash form. Companies that offer high dividends are normally very profitable and well established. Dividends are set during quarterly meetings and the directors can make a decision not to make a share of dividends in the event the company is assessed to be performing lowly. Dividends are normally set on per share basis. Dividends also do not reflect a company’s total profit since portions are left to cater for the company’s debts and more share acquisitions.
Procedure and time frame for dividends
Procedure and time frame for dividends is set in four phases or dates namely,
-Declaration date, the directors set a date for issuing of checks for dividends.
-Record date, here the company lists all shareholders that are meant to receive dividends.
-Ex-dividend date, it allows for completion of pending transactions which is between two and four days.
-Payment date, the company makes the actual payments by issuing and mailing all checks for dividends.
Dividend types and lists
Dividends can be classified into two, namely fixed dividends and variables dividends. Preferred stock owners get a fixed amount of dividends while the other common holders of stock get their dividends on variable rates. As an investor making the extra cash through investments of companies with a higher rate of paying dividends is a good way of realizing financial profits.
An investor has to take considerations when opting for dividend investment. Consider the amount of dividend yield when purchasing stocks to get an overview of what you expect to be earning. Company profits and their growth rate provide an idea of what the future projected earnings will be. Study the balance sheets of companies you hope to invest in, try to avoid companies that are heavy in debt no matter their dividend rate. Dividends in the long run if managed well can help greatly in achieving your financial gains from your investments.