Dividends can be a great perk of a healthy company, but don’t become overly excited by them because they do not necessarily mean a healthy stock.
What Are They?
-A payment every quarter of the fiscal year.
-If a company is producing x every year, you get paid out 3 or 4 times.
-You can change the payout rate if you are a major shareholder.
-Most are paid out every 4 months
-You can get paid in: cash, stock bonuses, or more shares
-Amateur traders love dividends
-Not every stock pays out a dividend
Dividend Pitfalls:
-Stocks fluctuate and if the stock declines you may get your dividend, but you still lose a portion of your investment
-Don’t choose stocks just because they offer a dividend.
-You want a stock that is in an appreciation
-A dividend should be viewed as an added perk of a healthy company (if you hold onto stocks longer than a quarter)
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