A. Investment in Dividend-Paying Stocks: Two Key Advantages
Dividend-paying stocks offer two primary advantages:
- Dual Returns: These stocks provide both dividend payouts from company profits and capital appreciation of the stock over the investment period.
- Minimal Price Volatility: The stock prices of regular dividend-paying companies tend to be less volatile compared to other investment options.
B. Key Concepts
- Dividend Yield: This is calculated by dividing the total dividend received over the past 12 months by the current market price. It is a crucial factor to consider and evaluate when investing in dividend stocks.
- Dividend Distribution Policy: It is essential to assess a company’s dividend distribution policy, including the percentage of profit or net worth that is authorised to be distributed as dividends.
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