For many people investing can be a little daunting. There’s lots of different lingo to learn and to many it’s all Greek! (Pun intended.) For the everyday investor who’s just looking to add a little punch to their retirement portfolio it really doesn’t have to be. If you’re looking to get a little more passive income in your golden years you can do that pretty easily. You don’t need a giant investment firm to handle your money for you even.
You’ve probably heard about dividend stocks but you may or may not be sure exactly what they are! A dividend stock is simply a security that pays a set percentage back to its shareholders. This information is publically available, and the payment date will also be publicly available. It’s sort of like a bonus a company pays to encourage people to hold on to its shares.
This company is so confident in their business that they will pay you just to hold on to their stock. They determined a dividend to be paid out per share to every person holding that stock. Usually this amount is paid yearly, but sometimes it’s quarterly or even monthly! My aunt and uncle live pretty much exclusively on the dividends they get from the stocks in their portfolio. They’re getting paid to hang on to large scale companies like Pepsi Co and Comcast.
high yield dividend stocks
In addition to the benefit of a nice percentage of your investment being paid out to your account, you also get to sit on a quality company and watch your shares grow in value. As long as you are holding the shares on the ex-dividend date you will be paid the announced amount for every share that you hold.
For example, if you have 100 shares of company XYZ who announces a $1.00 dividend per share you will get $100 whenever they pay out their dividend. In addition to taking the money you also have the option of reinvestment. This means that you are basically getting free additional stock of the company. Typically without paying a trading fee either! Your dividend will simply be invested in more shares of said stock and continue to grow your money!
There are dividend stocks available in every sector from health care to hospitality. The returns will vary as with the quality of the company. When choosing a dividend stock you should be sure to check several factors besides simply the dividend return. See how long the company has paid a dividend, how often they have raised it, and their history of payout.
A company can revoke or change a dividend at any time. If they go through a financial hardship an unrealistic dividend they used to get investors could go south. A solid company with a good payment history is much less likely to do this. They are also likely to raise your dividend and pay you more money!
