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Stock dividends usually can garner 3-6% on a regular basis. DON'T pay attention to the stock prices..or the market..pay only attention to the dividends! You will get the same dividend they offer, regardless of market price {true they may adjust the dividend down if the stock falls a lot, but you STILL get your dividend...they DON'T like to reduce dividends!} Se below.
Terrible advice as well as untrue. Total return is what matters more than anything else. Also dividends do get cut so they don't always get whatever is offerered. What good is a 3% dividend if the stock is down 30%?
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I also like DRIPs {Dividend Re Investment Plans} also are a good place IF you will continually have extra money to put into it. First, the dividends are reinvested into new shares or partial shares. Then, when You buy stock in a DRIP company, usually just one share needed, they require you add a certain small amount to it monthly to buy both new shares and partial shares..usually $25-$50/month. BOTH your new money AND the dividends are invested into new shares and partial shares. YOU money grows. As the market price falls, you buy MORE shares, but STILL get the same dividend they offer that year, and it "buys" more shares/partial shares. If you sell below your bought price, you get to write off your losses against capital gains. TRy companies you KNOW, LIKE or buy stuff from.
If you can stomach the market, and want a good/better rate than just 1% in savings accounts or the laddered CDs, try DRIPs, or dividend stocks.
Jsut a thought.
With the reinvestment programs you are potentially growing a current tax liability only to get back money at the cost of appreciation and as pointed out above dividends don't always stay the same or go up.
Terrible advice as well as untrue. Total return is what matters more than anything else. Also dividends do get cut so they don't always get whatever is offerered. What good is a 3% dividend if the stock is down 30%?
With the reinvestment programs you are potentially growing a current tax liability only to get back money at the cost of appreciation and as pointed out above dividends don't always stay the same or go up.
People panic when the market takes a drop, and want to sell off everything. That is bad too, especially once it recovers. So I suggest NOT panicking and NOT watching the daily market price anxiously, and thusly making rash decisions.
GOOD dividend generating companies DON'T want to reduce dividends,but as I Noted, can/will of need be or the stock underperforms, or drops. They don't like to NOT give out dividends, as those companies take pride in a record of years of consistent dividends issued... and don't like to reduce dividends, but if need be, will....You apparently didn't comprehend what all I wrote.
SUre, total return is a concern, but the stock down now, can recover 410% over its "down 30%" today if held long for the dividends...I know we COULD have another 1929, but I doubt it will happen, and we've had several drops and recoveries and several "corrections" which have also recovered to look at historically.. IF there IS a total loss on stock price, it can be written off against any capital gains when sold....only the purchase and sold price matter....fluctuations over the time held WILL happen, as I said, IF the OP has the stomach for it, and doesn't panic when a "correction" or A "drop" happens, and pays attention to the dividends earned only against the price paid.
EVERYONE will point out drops but NO ONE points out GROWTH! I notice you spoke ONLY of a drop, NOT saying "gee, it's UP 54%!!!
I NEVER follow the daily price, it would only cause me angst, I follow my dividends and the new shares the DRIPs buy.
I will take a consistent dividend issuer over a rising stock that crashes greatly suddenly when it is no longer "relevant", and has never issued a dividend ever.
With DRIPS, one can also amasses more shares, i have had some split then doubling my shares, sure the stock price cut in half, but it has risen since to the price paid,so I grow that way too. True, not all stocks are going to split, and true ALL holders of the stock will get theirs 2-for-1 or 3-for-1 split too, some I have held for a longer period now and even if the bottom fell out, I would still be farther ahead than 1% in a savings account. Like my father says of his Fortune top 10 company stock, some purchased as far back as 1965, he says it has grown in value, split so much, that even if the price dropped to $1, he'd make out like a bandit.
And there will still be a meager tax liability on the interest earned in a CD on the $40k too, if one wants to go that route and get a lowly 1% return, which the OP does NOT want, hence the whole reason for this thread. True, if the OP is looking for "instant quick cash income" {which doesn't exist}, neither to stock market nor the 1% savings account will do. Even REal estate, even caught right in a merging growth market and sold right is RISKY.
It all depends on the OPs risk tolerance and ability to stomach anything of growth over the 1% in an online bank account. If the OP has no stomach or wnats instant results, perhaps the OP should jsut stick with the 1% account.
I will take my chances holding my dividend issuing stocks, and hold my DRIPs. I DO have a 1% account, but it is for emergencies.
Terrible advice as well as untrue. Total return is what matters more than anything else. Also dividends do get cut so they don't always get whatever is offerered. What good is a 3% dividend if the stock is down 30%?
There are some classes of stock like public utilities where the dividend is pretty much guaranteed. You can also buy preferred stock with a guaranteed dividend though there isn't much of that out there compared to common stock. The problem with income stocks is that they get crushed in a rising interest rate environment just like long term bonds.
Over recent history, about half the total return on the S&P 500 has been dividends.
There are some classes of stock like public utilities where the dividend is pretty much guaranteed. You can also buy preferred stock with a guaranteed dividend though there isn't much of that out there compared to common stock. The problem with income stocks is that they get crushed in a rising interest rate environment just like long term bonds.
What preffered stocks pay guarnanteed dividends?
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Over recent history, about half the total return on the S&P 500 has been dividends.
You do understand that the dividend distributed comes at a direct cost of less price appreciation right?
Some credit unions have pretty good interest on 5 year CDs with small penalties for early withdrawal. I got 2.1-2.3% from MACU last year on 4 CDs I bought (1 every 3 months), I think they are currently advertising 2.1%, and ICON was advertising 2.16% last week, I saw. Shop your local credit unions for rates and penalties, and watch for promotions. Mine have a 1 time bump up on the 2.3% ones if rates increase, and if I take the money out early, I only lose the latest 3 months worth of interest. Pretty good deal. At least it beats inflation.
I've been gradually moving a large portion of my emergency fund into laddered 5 year CDs, because sitting in a savings account, they are only earning .05%. I'm going to buy another one this week.
Vanguard or TD Ameritrade will both let you trade VG index ETF's commission free. I'd buy a handful of VG ETF's you are comfortable with. They can be easily sold like any stock and the money cashed out relatively painlessly in case of the need to make home repairs or get away on vacation...
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