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| *Ostroff, Fair and Company>>>Investing |
Considering investing in shares but can someone please explain how the dividend works? |
look at http://uk.finance.yahoo.com/q/bc?s=vod.l... i can buy 628 shares with 拢1000, the dividend is 2.35p does this mean that i get 2.35p for each share purchased? so 628 x 2.35p = 1476? someone please clear this up for me Yes you got it 1476p = 拢14.76. Its not a huge amount. Generally you are hoping that the share value will also increase. Dividend income is taxable. If you make a huge amount due to the share price going up (and you selling them) you could also be liable for capital gains tax. But not on the first (very approx) 拢8,000 of increased value. Dividends can be issued more than once per year, and not at all. Also, the share value may well go down too. If you are unsure, simulate a portfolio. Bear in mind there are fees for buying and selling, and the buy price is more than the sell price at any one time. It can be several percent. Check what dates the divis are issued. Its not always the same date. You might have had to own the shares a period to qualify too. Buy a calculator then ask the same question again, thats 拢14.76 Yes, but you have to be careful with dividends when you are using it as a guide to buying shares - you can do as well by ignoring the dividend and instead look more carefully at the company and how well it is doing - written simply - popular shares can often offer poor dividend (because they will go up in value) and poor shares can offer a very strong dividend (14% +) to try to get people to buy them - but then if they go down in value, you can lose more, and there may not be a dividend paid that year if the profits are low. You will have to check, but dividend can be 'what we are paying now' whcih will change very soon, and if there is no profits from the company then there will be no dividend. (I am writing from a U.S. perspective but would assume this would also hold true for UK equities as well.) The dividend that is listed is the total dividend paid out annually for each equity. (The dividend may actually be paid quarterly, semi-annually, or annually.) If this is the same in the U.K. (and I assume it is), your annual yield is 1.48%. If you're buying strictly for income purposes, this isn't a huge yield. Bank stocks tend to pay larger dividends. For example, click on the link below for Barclays and see their annual yield is 2.82%. http://uk.finance.yahoo.com/q?s=barc.l... For Standard and Chartered, it is 3.53% http://uk.finance.yahoo.com/q?s=stan.l... Hi, here is a collection of informative articles about investing. a free online investing tutorial for you. http://www.investingtutorial.info/... good luck ! wish you make fortune from investing ! |
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