Using Stock Dividends To Create Residual Income Streams
Investors make money from stocks in a few ways, but, the primary strategy is to buy a stock of a company that grows. As the company grows its profits its stock should grow along with it.
But, originally, company stock were held because of the profits that the company would share with its shareholders through dividends. Dividends ranged from a few cents per share, to a few dollars a share for great-earning dividend stocks. This dividend is measured by a stock’s yield, which indicates what percentage of the stock’s price is represented in a dividend. For instance, a 1 percent yield means that the dividend is 1 percent of the price of a share of stock.
Some of these dividend-producing stocks rolled out money so regularly that they became known as “orphan and widow” stocks, so named because orphans and widows could live off the timely release of their dividends.
But is it still that way?
Dividend stocks often fall in a category called value stocks. These are decidedly un-sexy stocks that might not be on the list of corporate high-fliers in terms of capital gains, but they do produce steady dividends and continue to grow the price of their stock a few percent a year.
The truth is there are still solid companies that produce good dividends. Some companies not only produce dividends, but grow these dividends consistently–an added plus. (Although, you have to remember GM was one of those companies.)
Here’s what you need to know:
Pros: Dividend stocks are well-established and easy to pick out and track. Receiving dividends is also easy to set up and requires little maintenance.
Cons: Since dividends usually produce only a few cents per share, you need a lot of money or a lot of time to make significant money through dividends. Dividend-producing stocks are generally low risk, but they’re not no-risk.
This is the second post in a series about ways you can use residual income to grow your wealth. For more information, you might want to read the second post in this series. It’s called Owning Rental Units For Residual Income.
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Related posts:
- Five Ways To Create Wealth With Passive Income
- Automatic Income Potential From Automated Trading
- Create Products For Income That’s Passive And Massive
- Owning Rental Units For Residual Income
- Author! Author! Writing eBooks For Residual Income
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