How to Get Dividends

People who invest in stocks have one primary goal and this is to profit from it by receiving dividends. But before you start buying stocks you should know exactly how to get dividends out from your investment.

As an investor you should know which type of stocks you should buy or which company you should invest in.

Living off dividend payments and not needing to work anymore is a dream of most investors. In fact, people who buy stocks have one sole purpose: to receive dividends as a return of their investment; although, there are other benefits from being a stockholder like voting rights. Not all stock investments however, can result in dividend payments. Before investing, you should first consider which stocks you should invest in and what type of stocks you should buy.

Get Dividends by Investing Right

Dividends are quarterly or annual pay outs that are only given to stockholders when the company is making profit. Even then, the company will have to decide whether to give the company profit out as dividends, pay off debt or expand the company to increase its chances of earning more thereby increasing dividend payments in the future. So in order to receive dividends from your stock investment, make sure you invest in a company who is earning or in a company who is currently giving out dividends to its stockholders.

Aside from whether the company is making profit or not, an investor should also think about the type of stocks to invest in. There are two types of stocks that a company may offer: preferred or common stocks. Preferred stockholders receive dividends first in a fixed rate while the common stockholders get the remaining amount in a rate determined by the company. Common stockholders however, have other rights than being able to receive dividends.

Get Dividends in the Form of Cash or Other Items

Dividend payouts may not only be in the form of cash but can be in the form of stocks, property and other tangible items. So an investor who is planning to live off dividends must be prepared to receive a non-cash dividend. An advantage to receiving non-cash dividends however is that these items are usually highly liquid, meaning they can be sold for cash in just a short period of time.

An investor however should think twice before selling stocks received from stock dividends. The type of stocks received should be considered. Owning more stocks will also mean a higher payout once the company declares a cash dividend since the receivable amount is determined by multiplying the dividend rate by the number of stocks that an investor has.

In order to get dividends an investor should know which company to invest in and what type of stocks to buy. Knowing both of these will ensure dividend payouts and to live most investor’s dream of living off dividend checks.


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