| |
|
Article Directory :: Finance & Investment Articles
When you have some kind of investment that pays dividends, or makes regular payments of some kind, you may wonder if that is the best way to go. Dividends usually come in more than one form, but it will usually either be cash sent to you, or a cash amount that is reinvested into buying more stock for you. With this in mind, here are some thoughts about why one may be much better than the other.
Companies that give stock may give you the option of which method you prefer. You decide whether you want the cash, or having your money reinvested into more shares of stock.
When you receive a dividend from stock, you will, in most cases, need to pay taxes on that amount - whether or not you actually receive any cash. So, this will largely rule out the tax angle in making your decision about which may be the better way to go.
Being given cash from stock, however, will have an effect on your stock. Since stock increases and decreases in value over time, stock is considered to be a worthwhile long-term investment. This is especially true when a company is successful and its stock increases in value.
Getting a percentage of your shares back every so often is actually a removing of a portion of your investment - if it comes to you in the form of cash. Unless you take that same amount and reinvest it into some form of interest bearing account, you are actually losing money that you could be consistently earning on.
If that dividend is reinvested into purchasing more stock, then this is by far the better choice. As your stock increases, you will actually be earning interest on your interest. This is compound interest, which is of far more value than you can earn in many institutions. Over time, this interest on interest could soon double the amount you have in that stock.
Do not let getting a dividend fool you, though. Just because a company pays a dividend does not mean that the company is actually doing well financially. You should consider selling that stock if you could find one with greater profitability somewhere else - and get even greater dividends for even more reinvestments.
If the stock value is good with that company, however, then you should stay with it. Consider the amount of your initial investment, the profit you have now, and if the stock is increasing in value, why not just stay with it? If it is good company, the stocks will gain in value if the economy permits it.
Watch out for the company that allows you to reinvest the dividends, but at a cost to you. While many companies do this, you may have the option to change it at any time simply by filling out a form and submitting it to the company. It may be easier and cheaper to see if the company will allow you to automatically reinvest any dividends because there may not be any charges for this service. This increases your overall value instead of reducing it with cash dividends.
Learn the investment strategies used by many wealthy people to ensure their own futures, visit our website and request your free DVD of a 3 hour seminars with Self Made Millionaire Jamie McIntyre, visit the Stock Market Australia website.
 EasyPublish™ this article - publishers click here
More articles by Mika Hamilton
|
Free Report!
Ten Essential Secrets Of Article Marketing ... Grab Your Free
Copy Now:
Need Content?
Regular Top Quality Content for your Blog, Ezine or Website ...
Delivered Direct,
For Free!
Click For Details
Arts & Entertainment
Automotive
Business - General
Computers & Technology
Finance & Investment
Food & Drink
Health & Fitness
Home & Family
Internet Marketing/Online Business
Legal
Pets & Animals
Politics & Government
Reference & Education
Religion & Faith
Self-Improvement/Motivation
Social
Sports & Recreation
Travel & Leisure
Writing & Speaking
|
More finance articles: - Lucrative Trades in Forex - Finding the Right Forex Trading Software System (Wilson Trat)
Compared to trading stocks currency trading gives you big rewards. The main genuine advantage is that the sum of money you need to trade is extremely small. If you were ever going to get involved in forex trading, now is the time. However, you're going to have to find the right forex trading software system to be successful. - Creating a Budget that Works (Molly Wider)
Budgeting is about sacrificing, right? Wrong. Budgeting is about enjoying the results of a well planned financial strategy. If you think of budgeting as the ultimate cut-the-expenses experience, you'll never make it. Depriving yourself completely of indulgences is not something that will provide financial gain; at the contrary, it may very likely lead you to abandon your budget completely just out of frustration for lack of rewards. - Here's How Ordinary, Everyday People Are Making Money With Penny Stocks! (Grant Dougan)
One of my favorite investment types are penny stocks. Some investors stay away from these types of shares since they believe that they are risky. Don't let yourself be nervous though - you will earn incredible cash if you know how to find winners. - Daytrading Using Mean Reversion Strategies (Scott Cole)
Mean reversion is just another strategy that daytraders include in their arsenal when attacking markets on a daily basis. The opposite of the momentum type strategies, it is a good way for the daytrader to diversify and be able to find opportunities on a daily basis. - Fibonaccial Trading Techniques For Forex (John Eather)
Fibonacci was the great mathematician from Italy. He founded the new sequence of numbers and it was named after him called as fibonacci. The 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377,610 etc are the numbers of this sequence which has the starting of 0 and 1. Each number in this sequence is the sum of the preceding two numbers. - Forex Trading - The Market Is Not Your Enemy (Jay Meisler)
Every trader at one time or another has had a bad trading day that makes him feel like the market is his enemy. This article uses an example from a forex trading day to describe some of the conditions when this might occur and what a trader might be going through during this time. The goal is to create an awareness and to emphasize that the market is not the enemy. - Discovering the Pros and Cons of Using a Prepaid Credit Card (Tara Tiemann)
Prepaid debit cards are becoming a popular way to pay purchases and bills. It works like a credit card but instead of paying at a later time, a prepaid debit card can only be used if there is a deposited amount of money in your account. This article will enumerate the advantages and disadvantages of using a prepaid debit card. - Hard Money Lenders - Hard Money Loans (Louis Jeffries)
Real Estate Investors choose to use hard money loans as a source to purchase and rehab property to make a substantial profit that they may not have without the use of this expensive money.
We Automatically Distribute Articles
To Thousands Of Publishers And Web Sites:
Submit Article
All content is viewed and used by you at your own risk and we do not warrant the accuracy or reliability of any of the information. The views expressed are those of the individual contributing authors and not necessarily those of this web site, or its owner, Takanomi Limited.
|
|
