7 Reasons To Buy Dividend Stocks – Part 2

In the previous post I explained the first 3 reasons to Buy Dividends Stocks, in this post I will explain the other 4.

Reason To Buy Dividend Stocks

#4 Dividends Stocks Increase Over Time

Dividends Stocks Increase Over Time

Stocks are appealing has to do with the fact the dividend payout generally raises each year. That means you’ll get paid more cash every single year! Businesses that consistently raise their dividend are called dividend aristocrats.
A dividend aristocrat is an organization that not only pays a regular dividend, but also one that raises it on a regular basis (at least per annum). As an example, to make the S&P 500’s dividend aristocrat list, a business must have raised its dividend per annum for at least 25 consecutive years. Many of the businesses on this list are identifiable household names: Procter & Gamble (PG), Coca Cola (KO), Exxon Mobil (XOM), Colgate Palmolive (CL), Johnson & Johnson (JNJ), Kimberly Clark etc. They make products that millions of folks use on a daily basis. Some Canadian examples of dividend aristocrats contain: Fortis (FTS), Enbridge (ENB), TD Bank (TD), Telus (T) and Bank of Nova Scotia (BNS).
My own expertise with dividend stocks has been that in the last few years their dividends have raised on average between 5% and 7%. That’s at least twice the present inflation rate of 2%-2.5% which is another major reason why dividend stocks are so popular.

Among the reasons that dividend-paying

#5 Dividend Stocks Are An Inflation Hedge

Dividend Stocks Are An Inflation Hedge

Dividend stocks are a great investment because they often keep up with or surpass inflation with stocks, then you may see your purchasing power slowly erode as a result of inflation. Buy dividend stocks are an excellent way to keep ahead of inflation, particularly the aristocrats that often raise their payouts.

time. If you don’t correctly and have a long-term financial target invest your cash in growth assets, including dividend

 

#6 Dividends Stocks Are Tax Efficient Income

Dividends Stocks Are Tax Efficient Income

In many tax authorities, dividend income is taxed much more positively than routine employment income (ie. Cash that you work for). Businesses net of all taxes pays dividends. So it makes sense because the firm has already paid the taxes the tax burden should be less for someone receiving dividend income. People who receive dividend income must pay some sum of private income tax on it. Around 30% dividend income is taxed generally in most tax authorities. However, there’s no questioning the fact that dividends are tax efficient income. For instance, in Canada, if dividend income were a man’s only source of income, they could bring in almost 50k/year in dividends without having to pay any taxes on it.

#7 Buy Dividend Stocks Income Increases Your Cash Flow

Buy Dividend Stocks Income Increases Your Cash Flow

I am a strong believer the No. 1 issue most folks have is that they don’t have enough cash. A man’s stocks add some flexibility to a man’s finances that few other investment options can offer.

cash flow wills certainly raise because you’re purchasing an income generating asset. Generally, I constantly reinvest my dividends to grow my assets, both and my income. But if I had some unforeseen expenses or lost my job I could consistently choose the cash payments instead of reinvesting them. So dividend

Where To Locate a Very Good Dividend Stocks To Buy

First let me simply say that there's nothing special about the stocks whom I buy. In reality, they can be really rather dull. I say “ ” that is dull because these firms are usually the under the radar / company as usual sorts. In the investing world, “boring” is great because it generally means that a business’s gains and increase profile are consistent and steady which is precisely what you’re looking for as a long term investor.
Where can someone find businesses that match this profile? They could be seen in the pipeline, utility, banking, telecom and consumer basic sectors. These companies have endured for decades and have seen it all and that means that they.
If you take a gander at the top 10 holdings of a dividend mutual fund or an exchange-traded fund, you’ll certainly discover that a number of these funds possess the same set of firms. That’s no coincidence. Odds are the firms of these funds have been excellent long-term investments in the top 10 holdings. Instead, you can search the Dividend Aristocrats lists that are released each year out.
A number of notes of caution are in order yet. Beware of high yield stocks. A high return could cut the dividend entirely and could be an indicator a business is in some kind of financial problem. Second, observe the payout ratio on dividend stocks. Generally, you want your own dividend stock to have a payout ratio between 50%-60%. That gives the company room to grow its dividend as it grows its gains. A high payout ratio could mean that there's almost no room for the dividend to grow as time passes. Having said that, the telecom and utility sectors may have higher payout ratios as a result of nature of their companies.

As with all investing, it's important to do your own research and talk to a financial advisor. Below are some additional resources for those interested in learning more about buy dividend stocks.

7 Reasons To Buy Dividend Stocks – Part 1

What's It About Buy Dividend Stocks Which Make Them Such a Powerful Investment Strategy?

It appears that everywhere you look today some monetary commentator is encouraging folks to load up on dividend stocks. I’ve been investing in these stocks for over 7 years and have found them to be a successful investment strategy. There actually isn't any secret to this strategy. All you need is the readiness to do a modest number of research and a web-based brokerage account. For doing so the return could be tremendous. In this Heart I’ll give you 7 reasons -paying stocks. But first, what's a dividend anyways?

What's a Dividend?

If you’re new to investing you might be wondering just just what is a dividend? A dividend is only part of a business’s gains that's paid out, generally to its stockholders, on a quarterly basis.

Why Do Firms Pay a Dividend?

If an organization pays all its operating expenses and still has money left over, it's two choices open to it. It can reinvest that cash back into the company to keep growing its gains or it can pay some of the cash out to its investors. Modest firms that are fast growing normally pick the first alternative, while firms that select to pay a dividend are generally secure and mature businesses that have a slower increase profile.
By way of example, think of Microsoft (MSFT) and Apple (APPL). Where they kept reinvesting their earnings to build out their businesses to keep up their high growth rates both firms went through a period of extraordinary increase. Now that both firms have a dominant position within their businesses it’s no coincidence that a dividend policy has been instituted by them in the last few years. Additionally they have fewer growth opportunities available to them than they had and, thus, less of a demand to keep all their gains while they’re both fairly lucrative.
Now that we understand what a dividend is and why they are paid by firms, here are 7 reasons why everyone should possess dividend stocks.

#1 Buy Dividend Stocks Supply Equilibrium to an Investment Portfolio

Dividends supply essential stability and income during stock market crashes, particularly to an investment portfolio. During the 2008-09 marketplace fall my stocks were down about 50%. Those were undoubtedly frightening times but what helped me get through it all was the fact that my dividend income kept rolling in quarter after quarter. This is another great advantage of dividend stocks. They keep paying you in good times and in bad.

The majority of people think of the stock market as a “buy low, sell high” type of game where the investor is always striving to win” at timing the marketplace. In reality that tactic to investing is likely cost you dearly and to end really poorly. On the other hand, the strategy of the dividend investor is the precise reverse. Ideally the game will be to buy and hold…eternally as it pertains to dividend stocks. That’s because a growing variety of studies have found that it’s “time in” rather than “timing” the marketplace that makes all the difference with investment yields and that around 50% of market yields over the last 100 years have come from dividends.

#2 Buy Dividend Stocks Supply Passive Income

Dividends are an excellent source of passive income – that's income that you simply don’t need to
It’s for that reason that I’ve located investing in dividend-paying stocks to be an effective long-term strategy. If someone was to purchase and hold a basket of quality dividend stocks and reinvest the dividend income, with the aid of compounding, that individual may have the capacity to retire and live off of the dividend income alone; without ever having to sell the underlying assets that generate that income. Why dividend growth investing is such a strong investment strategy that’s.

work for. If you purchase a set of quality dividend-paying stocks subsequently you’re making your cash work for you. By reinvesting your dividend income you'll be able to grow your assets, both and your income exponentially over time. The passive income which you have coming in, the less you’ll really must work for cash.

#3 Dividends Diversify a Man’s Income

Dividends from blue chip firms that are quality are usually a steady source of income that can, over one’s working life, nutritional supplement employment income and finally become a primary source of income in its own right. I should say here that dividends are by no means ensured. After all, there isn't any such thing as certainty in life. Having said that, some Canadian banks, by way of example, have paid dividends for almost 200 years – through a Great Depression, two world wars, a Cold War and the International Financial Catastrophe. As one can get in my opinion that close to a sure thing.

Dividends are a simple way. Most folks rely only on 1 income source: their occupation. If you begin constructing an investment portfolio of quality dividend-paying firms then you're basically constructing another income stream that can continue to grow over time. This type of income diversification can function as a safety net to cushion the blow of a sudden job loss or unexpected increases in someone’s cost of living.

In the next post I will be talking about the other 4 reasons to buy dividend stocks.

Do You Want To Buy Stocks? Pros and cons of investing in stock

Best Stocks To Buy

You can get wealth by winning the lottery, getting a large inheritance, rob a bank, or buying stocks, but most people have to do the slow way. They get richer every day by its revenue to increase, reduce costs and invest in order to be difference.

No matter how you get your wealth to invest one of the many options millionaires and all other investors their assets, stock certificates can be bought. The center describes the pros and cons of investing in shares of stock, and shows how to buy stocks.

Advantages of Buying Stocks

There are many benefits to buy stocks:
• When you buy shares, you become part owner of a company. It is the satisfaction of a company in the holding, produces something important and large values ​​has. If the company does well, you can be proud to own a piece of it.
• The acquisition of shares has feel in the world of finance as an adult. If I people from two different companies (companies for which I worked), I feel proud to have a wallet, even if I was only part of the effect of the company.
• When you buy stocks directly and not via a mutual fund usually no fee for the purchase and sale of shares.
• Share certificates have no expiration date, so you. For a long time in order to hold, without worrying about the search for new investment, unless the company does not do what you expect
• The most important measures are one of the few investments that increase the value above the inflation rate. Most other investments such as savings accounts and bonds can not keep pace with inflation generally.

Disadvantages of Buying Stocks

Stock prices are very volatile. They rise and fall on the basis of what the company, but also up and down on the basis of what the economy to make another company, so that the government, and almost everything else. See the price goes, can be scary up and down, especially because it is their hard earned money, and they think about their future and retirement.

You can lose your initial investment when you buy shares. If you have a bad investment, and the company goes belly up, lose a substantial portion, if not all of their investments. Its principal is not guaranteed.

The biggest problem with stocks, in my opinion is that your brain and your heart want to do two different things at the same time. Reads the slogan "Buy low, sell high", and I understand. Of course you want, when prices to buy low and sell when prices are high. It makes sense to your brain. Why do you want to do differently?
The small problem with this mantra is that no one knows when the prices are low or high. Could further direction to rise and could be reversed. You can greedy and think you can wait a little longer to get a better deal.

And then his heart. Your heart does not want to buy stocks when a stock market crash, wants to sell everything and hide the money in the mattress. You do not want to sell, if the action is so good, you want to buy more. Hearts of others also feel the same way, so different that each when the stock market crash is sold, and it makes sense for you to do the same.

My stomach starts to be annoying when my brain and my heart to fight. You need to buy a strong stomach stocks.

Tips millionaire investing in stocks

Everyone some parts of the plot should have. You should buy stocks of a particular company decided. You can feel the pride to be a part owner of the company. You can learn the value of shares with each quarterly report or listing of the Company fluctuate. You can also see the value fluctuates is to do with the market, and know how the Stock Market. You can learn even this small amount of material, if you have the stomach to handle a greater investment in the stock market.

Instead of investing in a company, and the loss of their savings when the company goes belly-up, it is best to diversify their investments and invest in a number of companies. So if one of them falls apart, they have invested in other companies money that could do well.

Diversify your stock investments

I order to achieve diversification, and put all your eggs in one basket, have to buy a lot of shares. In general, it is too much work for one person to keep up with many companies to try, and most people do not have enough money to diversify properly hundred different companies. People who want to own shares generally find that an investment fund buying is a better way to diversify their reserves and keep the workload manageable. For the price of a management fee that an investment manager with experience and knowledge to persecute farms and buy and sell shares when market conditions are appropriate to do so, may permit, and I hope enriches every day.

Invest for the long term

It is also important to consider investing as a long-term proposal in shares. Although the stock market is very volatile in the short term, over time, tends to provide a higher performance than other Investments. If you can plan ahead and be patient, you can wait until the stock market will rise if it sold its investment. So make sure that you buy stocks low and sell high.