There are 2 paths of returns for the stock investors. These are:
1. Capital appreciation
2. Dividend yield.
Although every investors hope for capital appreciation, hope is not a really sound investment strategy.
We need something more concrete and more dependable, that is when dividend comes in.
Dividend being paid on a regular basis provides a more dependable return. You know you get a tangible return on your investment whenever the dividend is in your pocket, to either spend on your need or to be re-invested.
http://www.moneyshow.com/video/video.asp?wid=3508&t=3&scode=009393&th=1
Also read:
3 measures of a stock's value
Keep INVESTING Simple and Safe (KISS) ****Investment Philosophy, Strategy and various Valuation Methods**** The same forces that bring risk into investing in the stock market also make possible the large gains many investors enjoy. It’s true that the fluctuations in the market make for losses as well as gains but if you have a proven strategy and stick with it over the long term you will be a winner!****Warren Buffett: Rule No. 1 - Never lose money. Rule No. 2 - Never forget Rule No. 1.
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