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This is a guest post from Robert Brokamp of The Motley Fool. Robert is a certified financial planner and advisor of The Motley Fool Rule Your Retirement service. He also has a blog, which Twittering, and other things that are supposed to be important, but often overlooked, such as hygiene. Robert brings a new article to Get Rich Slowly every two weeks.A few weeks ago, I went to Morningstar investment conference and took ideas and predictions of all types of investment funds, investment managers and financial experts. In general, these people are not too optimistic about obtaining exceptional performance of any investment. Bonds and cash have negligible yields and stocks are not as cheap as they were a few years ago. I think the mutual orientation of the event could be summed up in a line of Tom Hancock OMG money management company, who said: ‘All I want is that stocks are not obligations. ‘During the opening session manager, investment and co-director of Pimco bond fund, Bill Gross, lamented the low rates of Treasuries. He also argued that investors should not expect yields 10 shares. But at the end of his speech, Gross suggested to investors looking for good earnings stable companies that pay dividends combat inflation – companies like Coca-Cola, Procter & Gamble, Johnson & Johnson, Southern Company and Duke Energy. (Full disclosure: ‘gross’ I own shares of Johnson & Johnson, and when children pass me on the street, shouting,)Bill Gross sang a similar air circulated in the pages of my article Your newsletter Retirement in the last month, stocks are cheap for exceptional results in the next decade, and one side of the market, dividends play a role even more important in your portfolio. (For more information on the current valuation of the stock market and what it says about future returns, read this update on the website of short Doug, a friend of cybernetics and ‘withdrawal’, which – like JD, the publisher of this blog -. Tourna your website into a successful business)While gross listened, I wondered what would happen to the extreme: if populations do not earn a penny and all I received was dividends? Fart Excel and found some fascinating figures.Salvado dividend
First, let’s recap the benefits of dividends.Unlike bond interest, dividends tend to grow over time, historically, at a rate exceeding inflation. For most investors, the smart strategy is to use the dividends to buy more shares, so they still receive more dividends, so you can buy more inventory, and so on. In a previous post, I compared the dividends more money trees producing fruit a little more each fiscal year. If you buy more trees with this cash crop is harvested further tax flora. Given enough time, you could have a greenhouse that produces green substance.Note: Items related files Get Rich Slowly include Introduction to dividend reinvestment plans and option plans of direct action.
To illustrate how you can pay in the long run, we will move the inventory of the bar and is supposed to have 1000 shares of a stock that trades for $ 100, for a total investment of $ 100,000. (Note that this is just a hypothetical example, very, very few people should have as much money in one action ;. Moreover, the same principles apply to an investment fund that pays dividends, even if you invest $ 100) the stock has a dividend yield of 3, so that in the last year, which received $ 3 per share, or a total of $ 3,000 in dividends.
Unfortunately, the share price does not move much over the next decade. In fact, it does not move at all. Here such investment could be similar after 10 and 20 years if the dividend increases 6 per year, but the share price budge.These days ago, the Internet offers endless opportunities for researchers dividend paying stocks. In addition, most brokerages have pre-selected lists of values or self-guided for detecting values based on the dividend yield instruments.It is important to note that dividends are not guaranteed and investors bear the ‘market risk’ is reflected in the share price up and down. Also, before you begin your search, not filter in an action that is strictly for the highest performance pay. It is more than that. More performance potential risk.If you are an experienced investor, here are five sites that may be useful in finding their dividends stocks.One of the most fundamental rules to succeed through bad times and good is to start playing with a defense solid. With respect to any type of construction of the investment strategy, the ability to play solid defense can see through difficult times in the market easily than other ordinary investors.The great advantage of dividend stocks is that they work well in up and down markets Unlike foreign exchange (Forex or). They even outscored the dividend payers not by a considerable margin. long-term drivers – such as earnings growth, cash flow and the ability of companies to pay dividends to its shareholders are the winners factors behind the line stock dividends.History shows that dividend stocks online are a particularly smart way to go. It is comforting to know that you are always a source of stable income during bad times involving volatile markets, sinking we live now.