The bulls and bears of the stock market are both tempting and scary to the investors. Speculators are enchanted by the stock market's potential to help them in making quick money with a big M. While those who tread with care and caution, often shy away for fear of losing. However, the stock market is not all about speculative gains or black Tuesdays. It is a place where committed companies look for raising money to fund their activities. Serious investors can actually create wealth not only for themselves, but also for the companies and the nation. A wise way to invest in the stock market is to empower your self with information. You have to know and learn about the company you invest in, from past records and future plans.
Irrespective of what the Wall Street Gurus predict or what the economic indicators like Dow Jones Average say, a simple and foolproof way of knowing that a company is doing well is to keep a track of how much dividend income does it pay to its share holders every year. If the dividend rates have been rising steadily every year, you know you have a safe bet. To benefit from the future prospects of such companies, it is a good idea to rollback the returns into the company. Which means, instead of adding the dividends to your savings, you can invest them in the shares of the same company. That way, you can ensure that the dividends you receive are always higher than what you got last, with a larger number of shares getting added to your investment portfolio every time.
With this kind of an assured investment plan in place, investors with a gambling streak begin to think beyond making a quick gain. While those who were afraid to take risks get wiser.
Let us find out why companies that give ever-increasing cash dividend income are a good choice for investment:
Your Share Holding Goes Up And So does Your Dividend Income.
Your income begins to escalate with your owning more shares every year and the dividend income rising correspondingly.
Your Dividend Income Increases Even If Stock Prices don't.
You are no more at the mercy of the market. Irrespective of what your shares are worth, you keep earning additional cash dividends. In fact, even if the market price dips, you are still at an advantage, as that allows you to reinvest to purchase more shares.
You are not hit by Inflation.
With the dividend income rising every year, you offset the effects of a rising inflation. This particularly provides relief to people who have retired and depend on a regular cash inflow to help them meet their expenses. At this stage one need not rollback the investment into further shares, instead, the cash dividend can be used as a kind of regular pension money.
Start Young
The ingenuity behind this investment strategy is that it protects you from the fluctuations that generally occur in the market. A lower stock market rate only means you buy more to increase your dividends more. It is advisable to start this strategy early in life while you are still working, so that your wealth builds up gradually and constantly over the years. And you are assured of a regular income, as you grow older.
Remember, the success of this proven investment plan depends significantly on the track record of the company you invest in. It should be one that declares a higher dividend at the end of each financial period. A simple way to find that out would be to calculate the dividend yield. You can do that by dividing the annual dividend per share by the price per share. Of course, no investment can be totally free of risks, neither is this one. Keep an eye on the dividend yield, and if that dips, it's a signal for you to opt out of the investment.
James Marriott is a finance writer with more than 15 years of experience in writing financial content, including those related to credit cards, mortgages, stocks, investments, and funds. He has been with RNCOS, a premier financial writing services company, for 2 years as head of financial writing. He is also a regular financial columnist with renowned business journals. For your comments on the article and further financial assistance, please contact our staff writer at info@rncos.com.
Alexis limo rentals ..In one of my previous articles (Investing in the stock... Read More
Ever notice how behavior in one area of life can... Read More
Mutual funds were created with the idea that one person... Read More
Most stock market traders have a favorite technical indicator.The one... Read More
Question: How does it get better when it gets worse?Last... Read More
When is a dividend not a dividend?The latest thing "conservative"... Read More
Last time we looked at the real performance of the... Read More
The World Bank claims that some two billion of the... Read More
Investors who exclusively use broadly diversified, no load mutual funds... Read More
So you're started trading, you bought some positions with your... Read More
Every stock market investor faces one primal enemy. An enemy... Read More
Let's say you are interested in this one company. You... Read More
The Law of Chaos is the theory of random unpredictable... Read More
With over 6,000 mutual funds available, it may be tempting... Read More
In 1960 an engineer working for a watch company in... Read More
After the publication of the first part of this two... Read More
Starbucks earnings are up again and so is their stock... Read More
This article describes the model of a natural relationship between... Read More
How often have you come across an advertisement or e-mail... Read More
Today we are inundated with tons of information about the... Read More
For years I have been saying you must have a... Read More
Everybody is riding the Wall Street Roller coaster. Even if... Read More
Mutual funds and brokers are always preaching not to buy... Read More
When most analysts, financial planners, fund specialists and investors try... Read More
The Surgeon General of the United States says that smoking... Read More
car service from Midway Alsip ..You have decided to buy some stock or mutual funds,... Read More
First let's see what protectionism is. According to Mr. Webster... Read More
Both the stock market and oil prices rallied recently, which... Read More
The stock market is very unstable at this time going... Read More
Sometime around 1980, can't remember exactly, there was a flight... Read More
Ever done any whitewater rafting or canoeing? Long periods of... Read More
Every Wall Street analyst, financial planner and broker will tell... Read More
People are always asking me when should I sell my... Read More
As an investor you will want to check out any... Read More
One of the basic laws of physics states that a... Read More
If you are serious about making and keeping money by... Read More
On the 40 year journey through the turmoil of a... Read More
This is a guide to the different types of mutual... Read More
Now that you have some money burning a hole in... Read More
Humpty Dumpty had a great fall and all the King's... Read More
One of the great "secrets" of successful people is discipline... Read More
Let's go into the details of why non-indexed mutual funds... Read More
Financial markets provide their participants with the most favorable conditions... Read More
There is nothing more exciting than finding an undervalued stock... Read More
You remember (they show it on TV every year) the... Read More
The Law of Chaos is the theory of random unpredictable... Read More
Have you seen all those big full page ads for... Read More
The Dow Theorycharles h. dowcharles h.... Read More
How many times have you said to yourself, "I'd like... Read More
When most analysts, financial planners, fund specialists and investors try... Read More
Stocks & Mutual Fund |