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.
executive chauffeured services Bradford .. Madison to Airport carExchange Traded Funds (ETFs) are a group of passive index... Read More
Profitable day traders recognize that momentum trading is among the... Read More
What is leverage?Here is a definition of leverage from an... Read More
Disclaimer: Please note that I do not necessarily purchase, own,... Read More
Because there are so many stocks that are NOT paying... Read More
Checked your 401K lately? Going back to about a year... Read More
One of the most believed bits of conventional wisdom from... Read More
What a great statement!I just heard someone use it in... Read More
Sometime in the third quarter of 1997, someone told me... Read More
Using Swing Trading Strategies and Technical Analysis when Trading Stocks... Read More
After the publication of the first part of this two... Read More
Let's hope you did not have any of the Enron... Read More
Sometime around 1980, can't remember exactly, there was a flight... Read More
The Law of Chaos is the theory of random unpredictable... Read More
For years investors have been taught to look into the... Read More
As I have said many times before in this column... Read More
Did you know you can make money (and a lot... Read More
Everything you invest in has risk so you want to... Read More
Several times each month I am solicited by various market... Read More
If you have talked to a stock broker or financial... Read More
The spring-loaded rat catcher is the ultimate low-tech device invented... Read More
AS BUILDERS BEGIN WORK ON THE FREEDOM TOWER in New... Read More
Stock investment advice is easy to find. Do you get... Read More
This is a rather simple strategy with which I am... Read More
An investor can find and research the best stock on... Read More
O'Hare Chicago prom limo ..First let's see what protectionism is. According to Mr. Webster... Read More
Caught in a whirlpool and being sucked under. No life... Read More
We are already in it, but you can't see it.... Read More
If you are going to be a winner in the... Read More
With over 6,000 mutual funds available, it may be tempting... Read More
If you are a baby boomer, time is not on... Read More
It seems that every day I turn on the TV... Read More
Look back over the years and try to remember how... Read More
If there is one term over-used when talking about making... Read More
There is a famous cliff on the ocean in Acapulco... Read More
The stock market has been going up for more than... Read More
Right now there doesn't seem to be any "gold fever".... Read More
Stock trading remains a very competitive field and the stock... Read More
According to Investopedia Inc. the penny stock market has seen... Read More
I know there are a lot of you out there... Read More
Any online investor / trader seeks an excellent off or... Read More
'Sector funds are too risky.' 'I doubled my money with... Read More
I use the P/E ratio as a secondary indicator for... Read More
This article describes the model of a natural relationship between... Read More
Do you own any mutual funds? In an IRA or... Read More
Reduce your investing and stock market risks by:Setting your sights... Read More
Many people would like to diversify their portfolios to expand... Read More
Investing in long-term financial vehicles give you the most gains... Read More
Exchange Traded Funds (ETFs) are growing. Investors are choosing low... Read More
Have you seen all those big full page ads for... Read More
Stocks & Mutual Fund |