Dividends are given when a company doesn't know what to do with extra money, and they are used to excite people about the stock. Some dividend stocks are awesome, but just because they are giving away money doesn't mean they are good.
Example: If a bad stock offers 10% and you make $100 from it, that seems awesome, but if the stock goes down 30% then you actually lost money.
Many of the big companies don't offer dividends because they are using the money to fund new business and execute mergers.
If you don't know what to buy then I would hire an advisor or just buy mutual funds and let someone else take care of it for you. Finding a stock to invest in can be really hard because financial statements can be long to read.
Example: If a bad stock offers 10% and you make $100 from it, that seems awesome, but if the stock goes down 30% then you actually lost money.
Many of the big companies don't offer dividends because they are using the money to fund new business and execute mergers.
If you don't know what to buy then I would hire an advisor or just buy mutual funds and let someone else take care of it for you. Finding a stock to invest in can be really hard because financial statements can be long to read.
I thought dividents where given out when the company was performing well, for example when they made profit they have to pay out to their stockholders because they have a % of the company?
Not because they are just giving away money that doesn't make any sense..
Makes sense that most company's will use profit to fund research and new business tho.
Nope. Companies use dividends to pay out extra money that they are not using. It pays investors for holding on the stock. Companies like Facebook are always buying more companies and so they are not paying a dividend. Microsoft, on the other hand, is paying a small dividend, which allows them to hold some money for purchasing. If a company is offering high dividends I would be careful. Not all dividend stocks are bad, just as not all stocks that are buying companies and adding on are good.
If buying low and selling high was easy everyone would be doing it. If you aren't willing to put in hundreds of hours of research I wouldn't invest a lot and only use the money you want to experiment with. I would get an advisor that spends hundreds of hours looking at the market or mutual funds that will diversify your investments.
For the reasons mentioned above this is why is important to understand whether you want to invest in stocks and shares and get dividends at the discretion of the company you invested in and based on their financial stability and profit generated, or go with bonds where although the return is less than a share this is on time and can't be evaded. At the end is a matter of how much risk you willing to take.
