Updated: Oct 26, 2020
Article provided by Dr. J.P. Chisholm of the FGBAU Team
Why receiving a dividend makes you feel like a winner!
Let's be clear,whether you are a new investor, moderate investor, or an experienced investor in the stock market, receiving a dividend (especially during the pandemic) makes you feel like you just won a major race or marathon.
This feeling has been intensified due to the pandemic and so many companies cutting back, which made dividend stocks from March 2020 to September 2020 hard to find.
Why Do Dividends Matter?
Dividends matter because dividends can provide stable income to an investor, they allow you to share in the company's profits, and you can use dividends to purchase additional shares of your favorite stock.
Dividends provide stable income
Because dividends are usually paid on a schedule, the income that you receive from a dividend stock is usally both a predictable and reliable source of income. Depending on how you traditionally use your dividend funds, some investors like myself have dividend funds already earmarked to pay various bills and expenses.
Unfortunately, during the pandemic with so many companies either slashing or temporarily suspending their dividend, the stability associated with traditional dividend funds has become as reliable as finding a lake in the dessert.
So for the companies that continued to pay out dividends (even ones that were reduced), having some level of stability in spite of the pandemic has allowed investors to feel like winners for having selected a stock that had enough to continue making dividend payments to investors in spite of the pandemic.
Dividends Allow you to Share in the Company's Profits
I invest for growth but I also invest for profit. At the end of the day, when I can also share in the profit of a company that I have invested in the form of a dividend payment, I feel like a winner and I am proud to have invested in the company.
Some investors are being told that corporate growth is more important than dividend payment to investors. I disagree because prior to the pandemic, companies were expected to maintain scheduled dividend payments while still balancing it's corporate growth.
Just like I enjoy witnessing the companies I have invested in grow and achieve limitless success, I equally feel successful as an investor when a portion of that corporate success and profit is shared with me in the form of a dividend payment.
Dividends can be used to purchase additional shares of stock
One of the things that I enjoy most about receiving a dividend is that dividends can be used to purchase additional shares of one of your favorite stocks. This is especially important in today's market as some companies are still trading at a discount. By using dividend payments to purchase additional shares at today's market discount, you are able to add additional shares without pulling funds from your personal bank account.
So based on these three (3) reasons, this is excatly why Stocks + Dividends = Winning.
How can I learn if a stock is paying out a dividend?
Looking for a resourceful tool online to search for dividend payout history? Try searching for it using www.Nasdaq.com and after putting in the stock ticker symbol use the "dividend history" tab to learn more concerning the payout history of the stock you are looking into.
"Stocks + Dividends = Winning"
So next time you invest, look for stocks that have continued to payout a dividend to investors. It will not only make you feel like a winner of a race or marathon, but it will confirm that you are a winner in earning dividends through the stock market.
If you would like to learn more about dividends stocks, or the stock market, please read more of our upcoming articles provided by FGBAU.