Can anyone invest in dividend stocks on a budget?
I'm looking into investing in dividend stocks, but I only have a limited amount to start with. Any suggestions or thoughts?
You can buy a few shares of a dividend stock through almost any broker. Since you have limited funds, use a discount broker to keep your costs at a minimum. Reinvest the dividend, that means you will buy more shares in that company with the money they pay in dividends. Reinvesting the dividend allows you to accumulate more and more shares which in turn pay you more and more money in dividends, which you will reinvest to buy more and more shares. You get the idea. At some point in the future, you can stop reinvesting the dividend and turn on the cash flow. Check out my web/blog for ideas on really good dividend stocks. TheMoneyMadam.com
I would recommend paper trading first. You dont want to use real money when you are learning. Mistakes will cost you.
Check out ING/Sharebuilder (www.sharebuilder.com). It has research and you can set up automatic investing. Your inverstment does not even have to purchase a full share let alone 100 shares.
The fees in and of themselves seem low, but if you only invest a small amount each time, by the time you get a 100 shares you could have paid quite a bit.
But, it is a way to get into stocks or EFTs while investing small amounts on a regular basis. If you pick dividend paying stocks, the dividends can be reinvested.
I'd like to add to what the others have said here, which is to use the Motley Fool's CAPS stock screener to find dividends by yield. (http://caps.fool.com/Screener.aspx?sour … snv0000001) You can set sliders for a minimum and maximum value, and you can also set some other criteria such as ensuring they have a positive P/E ratio to mitigate any capital losses.
I know Scottrade offers 3 free trades through a referral program, so for a cost of $0 you can buy into up to 3 different stocks, depending on what specifically you're looking to invest in and with how much. The downside there is that they don't allow free or automatic dividend reinvestment, rather, you'd have to buy more shares with the accumulated money (unless you choose to just have them send you a check for the cash you've accumulated). They have no other fees, and you could let your dividend stocks sit for as long as you'd like.
Why not try penny stocks? They are good for people with limited money to have a lot in stock.
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