Advertisement

  • Published Date

    February 16, 2020
    Learn More, Click Here.

Ad Text

PROMOTION THE POWER OF DIVIDENDS /here can I double my money this weekr and 'Are there any ten baggers around?" are common questions aimed at anyone working in investment. I hate to be a bore, but lexplain such returns mean taking levels of risk similar to those in bookies. So, if not trying to shoot the lights out in a week, how can an investor expect to increase their as rising, dividends can fall. However, management teams of many dividend paying companies are under pressure to sustain their dividends even in times of falling profits. Take Roche, the world's largest cancer drug manufacturer. It has increased its dividend every single year for 27 years. Sometimes though, companies So how do you assess a company's ability to increase its dividends over the long term? For this to happen, the company must be able to sustainably increase its profits. With this in mind, I think it is important to choose only shares in industries with high barriers to entry. operating in markets with favourable demographics and, mt importanty enough of the companies' profits must be being re-invested for growth. With a sensible approach, dividends have no choice but to reduce or wealth? suspend dividends. When choositng dividend stocks, it is important to When investing responsibly. I believe you need to take a long-term view and choose only those that you believe will sustainably be increase their dividend through free cashflow over the long term. can arguably provide a much more stable income stream than savings assess what you expect your returns to be. Returns from equities are a combination of dividends and capital growth. It is on dividends that I focus this article. accounts, which are reliant on interest rates and can be extremely volatile in the income which they pay. I think we all remember getting 7-8% and now we get 1% iflucky. However, in order to gain the extra income shares can provide, investors must accept fluctuations in the capital value. We tend to find that clients wanting to take a substantial income and not wanting huge swings in capital value, but accepting some, benefit most from a mixture of equities and other assets, such as bonds, which have low correlation withequities and still provide John D Rockefeller sakd: "Do you know the one thing in life that gives me pleasuret t's seeing my dividends coming in. So what is a dividend? It is simply the sum of money that a company pays to its shareholders out of its profits oF reserves. Therefore, with dividend paying stocks you get paid for holding them no matter what the share price is. However, companies choose the appropriate value to distribute to shareholders. This means that as well income. 8 Berry Lane, Longridge, Preston, Lancs, PR3 3JA 01772 780300 www.ribblevalley.raymondjames.uk.com RAYMOND JAMES | Ribble Valley F Waming Win invotng your captast rak PROMOTION THE POWER OF DIVIDENDS /here can I double my money this weekr and 'Are there any ten baggers around?" are common questions aimed at anyone working in investment. I hate to be a bore, but lexplain such returns mean taking levels of risk similar to those in bookies. So, if not trying to shoot the lights out in a week, how can an investor expect to increase their as rising, dividends can fall. However, management teams of many dividend paying companies are under pressure to sustain their dividends even in times of falling profits. Take Roche, the world's largest cancer drug manufacturer. It has increased its dividend every single year for 27 years. Sometimes though, companies So how do you assess a company's ability to increase its dividends over the long term? For this to happen, the company must be able to sustainably increase its profits. With this in mind, I think it is important to choose only shares in industries with high barriers to entry. operating in markets with favourable demographics and, mt importanty enough of the companies' profits must be being re-invested for growth. With a sensible approach, dividends have no choice but to reduce or wealth? suspend dividends. When choositng dividend stocks, it is important to When investing responsibly. I believe you need to take a long-term view and choose only those that you believe will sustainably be increase their dividend through free cashflow over the long term. can arguably provide a much more stable income stream than savings assess what you expect your returns to be. Returns from equities are a combination of dividends and capital growth. It is on dividends that I focus this article. accounts, which are reliant on interest rates and can be extremely volatile in the income which they pay. I think we all remember getting 7-8% and now we get 1% iflucky. However, in order to gain the extra income shares can provide, investors must accept fluctuations in the capital value. We tend to find that clients wanting to take a substantial income and not wanting huge swings in capital value, but accepting some, benefit most from a mixture of equities and other assets, such as bonds, which have low correlation withequities and still provide John D Rockefeller sakd: "Do you know the one thing in life that gives me pleasuret t's seeing my dividends coming in. So what is a dividend? It is simply the sum of money that a company pays to its shareholders out of its profits oF reserves. Therefore, with dividend paying stocks you get paid for holding them no matter what the share price is. However, companies choose the appropriate value to distribute to shareholders. This means that as well income. 8 Berry Lane, Longridge, Preston, Lancs, PR3 3JA 01772 780300 www.ribblevalley.raymondjames.uk.com RAYMOND JAMES | Ribble Valley F Waming Win invotng your captast rak