5 Reasons To Love Dividends

Divided payments are an important benefit to holding many shares. If I must be completely honest I took a look at the way share prices were dropping right and left at that time and thought to myself, I wonder if now might be a great time to buy stocks?”. MarketBeat empowers individual investors to make better trading decisions by providing real-time financial data and objective market analysis.

You had two options: find a stock that pays seven per cent - and probably carries significant business risk if it trades at that price - or you could accept Hansen's four per cent yield and then sell three per cent of your holding each year. If your business has the possibility of going onto the stock exchange later on, and investors can share in dividends, this is very important for them to know from reading your proposal.

While it depends on the REIT, if the REIT distributes a portion of their income as return of capital, interest, capital gains or dividends, each portion will be taxed accordingly. It tells us very little about its future other than to suggest that the company doesn't have productive uses for its cash in the business.

Being able to relax all day and collect dividends, which boost returns and lower volatility in your portfolio — and having maybe all of your income completely tax-free — makes it easy to see why dividend stocks have quickly become favourites for Canadians.

For the time being, attempting to live off dividends and income will stress a portfolio that is under-diversified and under-performing. Around half of the total return from Australian shares over the next 5 to 10 years is likely Dividend investing to come from dividends, once allowance is made for franking credits.

Basically, your stock represents your share in the ownership of the company and it is your claim on any future earnings and dividends. Your dividends will provide some comfort, but if you own a stock that pays a 2 percent dividend and the stock's price falls 20 percent, you'll still be 18 percent poorer than you were before the downturn.

As these dividend raises continue to increase at rates above inflation, my purchasing power only increases over time as my dividend income will be able to purchase more and more. 55% of trusts that pay a dividend have a revenue reserve covering at least 0.5 times their most recent annual payout.