Bank savings accounts beat stuffing money under the mattress, but when it comes to interest, not by much. Depending on the type of account, you’ll be lucky to earn 1 percent. (Check out our rates search and you’ll see what I mean.) These days you’re likely to earn more interest by owning shares in a bank than putting your savings in one. For example, Discover Bank was recently paying 0.85 percent on savings accounts. But put your money in their stock instead of their vault and at its recent price of $32, you’ll earn dividends of 1.25 percent.
What’s the difference between dividends from a stock and interest from a bank? For all practical purposes, nothing. Call it dividends, call it interest – it’s simply money you get back for putting money in. While dividends can change – hopefully they go up over time – what you earn is based on what you pay for the stock. For example, in a recent article called The Single Best Tip to Beat High Gas Prices, Stacy suggested investing in companies like ConocoPhillips to hedge high gas prices. When he first bought ConocoPhillips back in 2009, he paid $35 a share. Since this company pays $2.64 a share in dividends, Stacy is now earning 7.5 percent on his investment ($2.64 divided by $35.) But since the stock has doubled since then, buy at today’s price of $77 and you’ll only earn 3.4 percent ($2.64 divided by $77.)
Source: MoneyTalksNews
Related Articles:
- The 2011 Dividend Aristocrats
- 13 Dividend Stocks With A Good Yield/Growth Mix
- 11 Higher-Quality, High-Yield Dividend Stocks
- 6 Dividend Stocks That Will Make You Smile
- Dividend Stocks vs. Dividend ETFs
Dividend Stocks Can Help You Beat the Bank
Posted by D4L | Monday, March 26, 2012 | ArticleLinks | 0 comments »________________________________________________________________
Subscribe to:
Post Comments (Atom)
~
Popular Posts Last 30 Days
-
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...
-
The best dividend stocks have one thing in common: resiliency. They can continue increasing their dividends even in the harshest economic en...
-
Dividends and diversification -- those two things can help you achieve a comfortable retirement when combined with the income you will recei...
-
Investors wanting to enjoy steady and consistent income should consider dividend aristocrats. In fact, even in these chaotic times, dividend...
-
A good dividend stock has more than a high yield. Dividends need to be supported by cash flow, and cash flow depends on the long-term streng...
-
Higher dividend yields often imply that the underlying company paying the dividend has a higher risk profile. However, that's not always...
-
It's hard to beat a sustainable, high-yield dividend paired with a beaten-down valuation. The best dividend stocks offer high yields and...
-
When hunting for discounted investments, one excellent starting point is to look for businesses with dividend yields trading above their fiv...
-
Strange but true: seniors fear death less than running out of money in retirement. And unfortunately, even retirees who have built a nest eg...
-
BDCs can be excellent investment options for those seeking high returns, particularly when acquired at favorable valuations and supported by...
0 comments
Post a Comment
Post a Comment
Note: Only a member of this blog may post a comment.