Many people automatically assume that investing in dividend stocks is a guaranteed way of making money, particularly if you invest in those with high payouts of between 5% and 10%, for example. However this is not really true at all.If you are investing for say 10 or 20 years, then you could argue that the timing of your buys is not necessarily that important. That’s because by earning say 5% every year from your dividend stocks, these payments will more than compensate for any flat or slightly negative share price movement. This is particularly true if you reinvest the proceeds each year.
However if you don’t intend to hold on to these stocks for as long as this, then you need to place more importance on when you actually buy because it can make a huge difference. Assuming that a company is likely to continue paying decent dividends each year, you should ideally invest in these companies when the share price is temporarily oversold. Another way you can lose money is if you look for income-generating stocks from amongst the small and mid-cap companies. While some of these companies offer some very attractive yields, they are a lot riskier because their futures are a lot less secure than many of the large-cap stocks. If they run into difficulties, they could easily reduce the dividend or scrap it altogether.
Source: Counting Pips
Related Articles:
You Can Lose Money With High Dividend Stocks
Posted by D4L | Sunday, February 13, 2011 | ArticleLinks | 0 comments »________________________________________________________________
Subscribe to:
Post Comments (Atom)
~
Popular Posts Last 30 Days
-
The best dividend stock nobody is talking about is an undervalued, high-dividend chemical company poised to grow at an exponential rate. Wit...
-
If any investor has stood the test of time, it is Warren Buffett. For years, the “Oracle of Omaha” has had a rock-star-like presence in the ...
-
Last week, we found out that the consumer price index (CPI) went up by 8.3% in April, more than the 8.1% estimate. Meanwhile, the ongoing wa...
-
A full-blown recession, or the late-year rally in Wilson’s view – the natural move for investors will be toward defensive stocks, moves to p...
-
The Dividend Kings, which are those stocks with at least 50 years of dividend growth, is an excellent place to find high quality names. Ther...
-
If any investor has stood the test of time, it is Warren Buffett, and with good reason. For years, the “Oracle of Omaha” has had a rock-star...
-
When a retailer has a sale, it's often celebrated with banners, signs, and commercials telling customers not to miss out on the spectacu...
-
Mid-cap dividend stocks are the best bargain on the board right now. I love them because lame income investors don’t consider them. They fix...
-
When shares trade at a 40% discount to book value, they should have substantial flaws. This REIT isn’t perfect, but it deserves a higher rat...
-
5 big yields, all with upside. But I've got 1 more share to mention. With most of the earnings releases out, the charts are updated to s...
0 comments
Post a Comment
Post a Comment
Note: Only a member of this blog may post a comment.