ZAlthough the American companies included in the S&P 500 index are only gradually bleeding their economic results for the second quarter, it is certain that April, May and April brought a record payment of dividends. Total companies from the svm index Action senty140.6 billion dollars, which is a 13 percent increase in the disbursed volume. And the fifth quarter should go tunj. Let’s take a look at when a stock dividend makes sense.
How do I get through the events?
Each shareholder usually invests in the share of a selected company with a long-term view, i.e. that the investment is worth it. In order for the investment to move, the company must generate a profit or at least have to deal with it in the future (tk with interest rate actions). If this were not the case, the investment in the share would be a common airplane, with the investor hoping that there will be some crazy people, not him, who will buy the shares and drive their price up. He then with a profit prod. But when a company generates a profit, it increases its value, which is reflected in the increase in the price of their shares. That’s why they probably investi d P/E ratio, which k, how many dollars the investor is willing to give for one dollar of the company’s profit. If, for example, the ratio is 4, then it means that the investment will pay for itself in three years, if the company generates the same profit and nothing else changes. When the profit growth accelerates, the investment in the form of an increase in the stock price will be faster for the investor. Assuming, of course, that the company doesn’t give in to spending your pension on a stupid acquisition. If the company gets to the point where it doesn’t see the need for investment, the profit can be paid out.
How do companies pay their profits?
The company that generates the profit must pay the profit. That’s why it usually happens in the market during the time of private companies. Every company goes through several phases of life, when the first is a growing, predatory company that tries to grab the largest possible share of its market with massive investments. In the first phase, therefore, there is no room for the payment of profit, only because the company promises and invests in it, hoping that the capital will be able to appreciate. If the company pays the first phase, it reaches a position where until it generates a profit, it is equal to the size of the investment of the company. For example, Coca-Cola has conquered the whole world with its drinks, and its potential for further rapid growth is not very high. Growing a capitalization from $10 billion to $100 billion is usually an effort not from $100 billion to a trillion dollars. Therefore, Coca-Cola belongs to the companies that regularly send their profits to investors through dividends for decades. An alternative way to pay dividends is share buybacks by the company itself, when the company buys its own shares for profit, which may lead to an increase in their price.
For two dividends sense?
K dividendovm akcim investments are usually reversed in uncertain times, when dividends are able to absorb losses from occasional drops in the share price. Dividend-paying companies are usually compared to more established and relatively stable companies, thus creating turbulence. The risk of a 90 percent drop in Coca-Cola’s share price is significant for a young technology company in its growth phase. Therefore, the company’s dividends make sense, especially for people who want to have a better night’s sleep and dream of high risk and rapid growth of the portfolio, standing for the preservation of its value – typically people close to retirement age. However, this does not mean that dividends are only for pensioners. Looking at the S&P 500 index and its alternative S&P 500 Dividend Aristocrats It is assumed that dividend shares have lagged behind the full index by an average of only 0.3 percentage points per year during the reinvestment of dividends in the last ten years. Dividend aristocrats mean companies that have increased their dividend per share for more than fifty consecutive years. Among them are, for example, oil companies Chevron, Exxon Mobile, technological IBM or healthcare Abbvie.
Where are the hks hidden?
Investing in dividend stocks also has its disadvantages, the main one being the tax liability of the investor. In the West, it is often customary to pay the same tax on both capital income (i.e. profit from the sale of securities) and dividend income. In the Czech Republic, however, capital gains tax can be completely avoided for the duration of the time test of at least two years. If the income did not exceed 100 thousand crowns in a given year, the tax can be avoided, it is a so-called value test. However, only one of the tests can always be applied, it is not possible to combine both. In addition, with some brokers, there is a risk of double taxation, if you are not able to fill out the W-8 Ben form, for example, for American shares. Getting a tax payment in one’s own way is an administrative burden, and if it is not a large pension, it is usually also uneconomical. Dividend payments from so-called passive funds also have a similar tax problem. These are funds that track a selected index, for example change S&P 500 Dividend Aristocratsand to start paying dividends to investors.
According to him choose shares?
Anyone who wants to withdraw individual dividend shares must state in advance how long It is always necessary to analyze each company, which assumes the ability to understand financial statements. If the investor does not have the knowledge, patience or time for this, he should not choose individual actions at all. No first filter can be built on several parameters. In the first step, a good investor will filter stocks according to how they offer the current dividend yield, which is the last dividend paid in relation to the current share price. However, going after the companies with the highest revenues is not a wise procedure, regardless of other parameters. A high income simply means that the company’s shares are falling, which will probably have a reason. If there is a dividend, then you don’t have to be held back. The reason is that the company does not spend a high percentage of its profit on paying dividends. It should not be heavily indebted, or high debt could destabilize it in times of recession. Its business should be as marketable as possible, with sales and profits growing steadily. At the same time, the company should operate in industries that generate pensions, even when there is a recession – people always buy food or medicine.
Where do you go for inspiration?
Exist lists dividend aristocrat, or even dividend king. It is an established company that has been steadily increasing dividends for dozens of years. Dan companies are thus aware of their status and therefore have the motivation to continue in the trend. In addition to this list, you can be inspiredv portfolich dolarovchmiliard. Warren Buffett, in particular, is quite famous for the fact that he includes dividend-paying companies, such as the famous Coca-Cola or Chevron, in his portfolio. The inspiration can be such a variety of materials, which provide brokei for their clients, when they try to draw attention to someone taking titles or specific passive funds. The stock market bursts with an interesting offer of dividends, and the investor avoids exchange rate risk with Czech shares, or the need to invest. However, the selection of specific actions is fraught with risks, so it should be done by an experienced investor. A certain alternative are passive funds, which sell dozens and hundreds of dividend stocks at once.
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