ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

How I Invest Part Four: Dividend Investing

Updated on November 6, 2012

Dividends=CASH

In times of low interest rates look to Dividend paying stocks for extra cash.
In times of low interest rates look to Dividend paying stocks for extra cash. | Source

Dividends? Look for the return

 I love dividends. I rarely invest in stocks which do not return any dividend.

Many large companies have reduced or stopped dividend payments over the last couple of years. Now however companies are talking the D word again. Walmart is talking of boosting dividends and Bank of America is talking of returning investor patience by a return to paying dividends.

In the long term I have held Bank of America (BAC) throughout the downturn and bought all the way down to almost its lows of $5.00 per share. I am glad of the return to talk of dividends and am a long term hold for the stock.

Walmart has not been part of my portfolio but with the talk of higher dividends I'll be watching it.

Dividends for me are a reward for owning the stock for the long term. I invariably opt for dividend reinvestment programs (DRIP's) when I can, they are cost effective ways of increasing ones holding, one can stop a DRIP at anytime to opt for cash if ones mood towards a stock changes, but for long hold stocks DRIP's are my favorite method of receiving dividends.

I also like stocks and Exchange Traded Fund's (ETF's) which pay regular monthly dividends. One of my favorite stocks is ING Prime Rate Fund (PPR) it is not an expensive stock around $6.04 but it pays a dividend each month of about two cents per share. It is a risky stock, the business is short term loans to business. During the credit crunch the price fell but it has maintained it's dividend at or above two cents for about a year.

I also like the Bond ETF's for their regular monthly dividends, but these are a little on the pricey side at the moment, as the economic cycle comes around though their prices should comeback to more value limits and be a better bet, I would guess by the end of 2012. Also about that time Corporate Bonds may well be better value, again they rose as returns from cash declined and investors looked to bonds.

Don't Forget the Dividend.

 It is possible to receive quite a good stream of income by looking at dividends. If one selects carefully one can use the quarterly dividend or semi-annual system to have some dividend income every month. Dividends are a regular return on your cash. Careful planning can save ones money for more investing if one doesn't choose to use DRIP's; setting dividend income aside in a cash account can be a method to support cash savings for further investments.

One way to make more money is to increase the amount of time one earns money, if one can make multiple strams of income work, making money even as one sleeps one can increase ones earning potential considerably. Dividends are one way to make money as one sleeps.

Low Interest Rates? Look to Dividend Paying Stocks for Income

When interest rates fall on your cash investments, as they have during the past few years (2009-12) This article is updated late in 2012. Cash investments often return little benefit.


Example a standard interest rate on a cash CD with Union Bank of California is today paying 0.3% so with inflation at about 1% cash is losing value in real terms and will do so for the foreseeable future.


I have several stocks paying me dividends at over 5% per year.


My largest stock is ING Prime Rate Trust (PPR) at present it is selling around the $6.20-6.30 price point, and is returning me 0.8% dividend per month APR at about 5.6%


A nice monthly return for a small investment.


Do not put too much store on a large dividend amount. ING is a well known company and has a good track record of dividend increases.


Some companies may use large dividends to lure unwary investors. Always check other fundermentals such as price to earnings ratios, company liquidity, cash flow, the main business of the company you are investing in.


ALWAYS look the dividend gift horse in the mouth. You will be sure to get a nasty surprise if you don't.

Comments

    0 of 8192 characters used
    Post Comment

    No comments yet.

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://hubpages.com/privacy-policy#gdpr

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)