Dividend investing is based on the idea that by paying a dividend, a company has established itself as relatively stable financially, and that therefore it is worthy for investment consideration. However, dividend investing can be tricky, and it is easy to make mistakes. Making mistakes in dividend stocks can be very costly, as such mistakes often come from the standpoint of complacency. Here are three common mistakes to avoid.
1. Chasing yield - This is probably the biggest mistake that dividend investors make. Investors will often judge a company’s value or upside potential by its dividend yield, and they will reason that a stock with a high yield must be cheap. 2. Assuming that dividend yields will protect you from losses - Many investors assume that dividend-paying stocks have some sort of “floor” set by the dividend. 3. Reinvesting dividends - A popular strategy that dividend investors employ is to have their brokers automatically reinvest their dividends into the stocks of the companies that paid them.
Source: Wall St. Cheat Sheet
Related Articles:
- Don't Touch These 5 Dividend Stocks!
- 7 Dividend Stocks Headed In The Right Direction
- Who Owns The Top Dividend Stocks?
- 6 Big-Name Dividend Stocks Crushing The S&P 500
- 3 Higher-Quality, High-Yield Dividend Stocks
Dividend Investing: 3 Common Mistakes That Ruin Returns
Posted by D4L | Friday, July 11, 2014 | ArticleLinks | 1 comments »________________________________________________________________
Subscribe to:
Post Comments (Atom)
~
Popular Posts Last 30 Days
-
If you're worried about inflation rearing its ugly head next year, you should probably worry about more likely catastrophes, such as bei...
-
As a relatively new blogger, the one thing that has stood out in my mind is the number of Canadian bloggers in the areas that I am most inte...
-
When a company pays a dividend, it's a good thing for shareholders. When a company consistently pays a dividend every quarter, it's ...
-
If you've been holding back from investing in your future just because you don't have a lot of extra cash to spare, I've got gre...
-
If you are looking for high-yield dividend stocks that can beat the market, you might want to check out these three companies. They all have...
-
If you are here to build a portfolio that thrives in all seasons, consider dividend stocks. They can generate steady returns and provide sta...
-
The company's remarkable consistency and low-risk business model make it a "first-choice investment opportunity," according to...
-
One way to achieve financial freedom is to create passive income, or income that does not depend on your active involvement beyond a certain...
-
Since 1926, dividends have contributed approximately 32% of the total return for the S&P 500, while capital appreciations have contribut...
-
My top financial goal is to eventually become financially independent. The foundation of my strategy is to make investments that produce an ...
Mistakes are bound to happen but I don't know if I would consider #3 a mistake per se. Would you expand on this and explain why you feel its a mistake? Thx