What is a Dividend Stock
No matter what we do in life, we have to make choices. Sometimes we make good choices and sometimes not as good as we want. On the other hand, besides our personal choices, we experience good ideas we encounter and the bad one we want to avoid. The good ideas that we are attracted to make maybe us more successful or impact our life choices, while ideas not worth pursuing are just not part of what appeals to us. We experience similar kinds of ideas in the stock market. For example, we see some stocks performing year after year for 10-20 years and are always getting better.
Finding Worthwhile Investments
These stock are always coming out with new products and services which make the investment more worthwhile. We experience more bang for our hard-earned bucks. That kind of experience gives us a good gut-level feeling we are headed in the right direction. On the other hand, we may encounter a stock which always seems to have its ups and downs, but mostly downs and doesn’t seem to be stable over a longer period, though they hold onto what they have been given as far as services and products. The first stock may be compared to a good glass of lemonade from fresh lemons. The other stock is much like lemonade that has been made with a good substitute and it is quite watered down and close to losing the taste of lemons altogether. Keep a close watch on how a stock is performing over time and see if it shows you the signs of a healthy stock with good management beneath it, or poor management with unhealthy financial habits.
It is good to learn all you can about how to invest in dividend stocks. Dividend stocks are companies that have performed well, maybe in the DOW or NYSE, for a long period and have healthy returns on their investment. These well-established companies make a profit during the financial year and rather than just letting the shareholders reap the benefits of the stock prices, they also give the option to receive what is called a dividend. A dividend is a monetary payment of the profit of a company to a shareholder. The dividend is divided among all the shareholders and according to how many shares each shareholder holds in his portfolio of that company. Here is an example. Company XYZ earns $100 during this quarter. Five shareholders own two shares, each of XYZ stock. The company XYZ decides to give $100/10 = $10/share in dividends. So each shareholder would receive $20 in dividends for this quarter. Some people have more money to invest and they purchase more shares because they intend to live on their dividends. Besides companies that pay dividends, there are mutual funds that are a collection of dividend stocks that also pay dividends yearly or semi-yearly. Sometimes bonds will pay dividend monthly.
The Good, the Bad, and the Horrendous Stocks
Unfortunately, just as there are good stocks that you cannot get enough of, so there are poor performing stocks that anyone should do their research to avoid. There have been some stocks which have been discovered by the FTC to be fraud stocks and are part of the corruption that creeps into the stock market. A stock market is a beautiful place, and there are plenty of good recommendations by professional people who want to help sincere investors trying to get their money to work for them in the stock market. On the other hand, there are scams, frauds, and corruption that get their hands mixed up in good things. Until the FTC can investigate and stop them, they are here to stay. Being cautious and doing your research on your investment strategies will pay off handsomely to a sincere investor throughout a lifetime. Over time, an investor will find credible references and people who ring true like the liberty bell. You will be able to count on what they say. Often, you will need to do your research and keep your ears open to who is an excellent resource.
Learn From the Best
The best thing a stock investor can do is to do research diligently and follow a common-sense form of investing. People in the least places can get caught doing the wrong things and that leads to some legal, severe allegations.