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64 votes
Accepted

Why are dividends different from property income like rent?

I will give a counterpoint to Bob Baerker's answer. When your tenant pays you your rent, it does not decrease the value of your house. It doesn't decrease the value of the house as a physical asset, ...
nanoman's user avatar
  • 30.2k
61 votes
Accepted

Dividend Payments - Am I entitled?

No, you're not entitled to the dividend payment, as you bought the shares after the "Ex-Dividend" Date. The price you paid for the stocks should have been reduced accordingly to reflect that. ...
GS - Apologise to Monica's user avatar
61 votes
Accepted

Is it legal to “mine” dividends?

Is it legal to buys Stock A on June 30th, sells it on July 2nd, then buy Stock B on July 14th, sells it on July 16th, then buys Stock C on July 30th, sells it on August 2nd... and continues this ...
mhoran_psprep's user avatar
51 votes

Borrowing money to buy shares for cashflow?

Buying individual/small basket of high dividend shares is exposing you to 50%+ and very fast potential downswings in capital/margin calls. There is no free lunch in returns in this respect: nothing ...
Philip's user avatar
  • 5,768
49 votes
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Can I get a dividend "free lunch" by buying a stock just before the ex-dividend date and selling it immediately after?

Not minutes, but hours. The "ex-dividend" date is the deadline for acquiring a stock to receive a dividend. If you hold a stock at the beginning of this day, you will receive the dividend. So you ...
Ben Miller's user avatar
  • 116k
41 votes
Accepted

In USA, can I set up a one-person corporation and pay myself mainly through dividends?

Is this possible (for a single-person corporation) in United States? Yes, but if the salary you pay yourself is too low then you risk getting flagged for not providing yourself with reasonable ...
Nosrac's user avatar
  • 6,839
36 votes

If a company that doesn't pay dividends makes a large profit, where does it go?

It doesn't go anywhere. It stays in the company as undistributed profit. If the company has too much cash and no opportunities to invest it in further growth, it can be harmful to the company's ...
Petr H's user avatar
  • 794
35 votes
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Why is the dividend yield on the S&P 500 so low?

Stock buybacks are an alternative way of returning money to shareholders that is being used instead of dividends. Some reasons to prefer buybacks are: Each shareholder can choose when to realize ...
Fadeway's user avatar
  • 466
33 votes
Accepted

Can a company stop paying dividends?

Yes. Companies increase, decrease, start paying and stop paying dividends when they think it appropriate. If a company has been going through some problems and makes a loss, or even a large decrease ...
Victor's user avatar
  • 21k
28 votes

Is it legal to “mine” dividends?

You can buy any or all of those stocks if you have the cash (or margin) to do so. But why would you, just because they pay a dividend? Suppose you buy stock (A) at the close today for $100 and ...
Bob Baerker's user avatar
  • 76.8k
27 votes
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Why do companies pay fixed dividends instead of fluid ones?

Share value Paying dividend is a way to be more attractive to more shareholders. The more fixed it is, the easier it is for a shareholder looking for cash returns to invest. You will attract juicy ...
Stian's user avatar
  • 1,104
27 votes
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How are dividends good for stock/share investors?

We have questions on this site wondering why people would people invest if a company doesn't pay any dividends. You are asking the opposite question: why would I want a dividend? The answer is that it ...
mhoran_psprep's user avatar
25 votes
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Dividends - Why the push to reinvest?

A dividend is a cash disbursement from the company. The value of the company goes down the same amount of the dividend, so it is analogous to having money in a savings account and taking a withdrawal ...
D Stanley's user avatar
  • 137k
24 votes

In USA, can I set up a one-person corporation and pay myself mainly through dividends?

Single proprietorships, even if they are incorporated as a limited-liability corporation (LLC), and especially those in which the proprietor is the sole employee, are usually treated as pass-through ...
Dilip Sarwate's user avatar
24 votes
Accepted

Why don't all dividend-yielding companies offer dividend reinvestment plans (DRIPs)?

In the past, a DRIP made sense for small long-term investors because reinvesting dividends in an average brokerage account wasn't trivial. The brokerage would only let you buy an integer number of ...
Justin Cave's user avatar
  • 27.3k
23 votes

Are Roth IRA dividends taxable?

For a Roth IRA, everything withdrawn is tax free as long as you meet the age/time requirements. You are correct that the contributions have been taxed; but the dividends, interest, and growth due to ...
mhoran_psprep's user avatar
23 votes

How does dividend work in an index fund?

They are distributed to investors much like any other mutual fund, same thing with capital gains, although those distributions tend to be lower in value. Here is some info from the Fidelity S&P ...
Pete B.'s user avatar
  • 76.7k
22 votes

Is it correct to think a stock has risen 300% and it is as if it is giving out 20% dividend and never sell it?

The stock price appreciation is a "sunk gain" (analogous to a sunk cost). The relevant yield is 5% because the choice you have now is between the $2/year income stream and the $40 you'd get ...
nanoman's user avatar
  • 30.2k
21 votes

Forgot to encash dividend Cheque!

Write to the registrar of the company. They will arrange a fresh cheque. If your mother is holding physical shares convert them to demat. Dividend are electronically credited to your account.
Dheer's user avatar
  • 57.1k
21 votes
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If your plan is to reinvest dividends, wouldn't you rather the company not pay dividends altogether?

Not necessarily. Your reinvestment has no direct effect on the company. But if there were no dividend, all that cash (that would otherwise go to dividends for all shareholders) would be retained by ...
nanoman's user avatar
  • 30.2k
21 votes

If an investor does not need an income stream, do dividend stocks have advantages over non-dividend stocks?

There is not a direct advantage (meaning that do not produce actual wealth as you mention), but it can be an indication that the company is a good stable investment. If a company pays dividends, then ...
D Stanley's user avatar
  • 137k
19 votes
Accepted

Why does VOO pay less dividends than SPY?

Do you see how VOO and SPY don't have the same price? Say you and I both start an S&P index ETF. For sake of easy paperwork, and to discourage small customers, you sell shares at a starting value ...
JTP - Apologise to Monica's user avatar
19 votes

Where can publicly traded profits go but to shareholders via dividends?

If a company earns $1 Million in net profit (let's say all cash, which is not entirely realistic), it can do one of three things with it: Invest it back in the company (by buying more assets to ...
D Stanley's user avatar
  • 137k
19 votes
Accepted

Are dividends exclusively a part of earnings?

In the end it comes out of earnings, but the earnings don't have to be made that financial year. So yes you can pay dividends despite negative, zero or low earnings in a specific year. This can be a ...
Thomas 's user avatar
  • 1,021
19 votes

Why are dividends different from property income like rent?

Just to give an alternative analogy to the other answers: Think of a company as being like your bank account. If the bank account has $100 and it earns 10% interest per year: A) If you decide to keep ...
JBentley's user avatar
  • 2,513
19 votes
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Can you trust shares with high dividend yields?

I only looked at TUI, but I imagine this is valid for the others as well. What does "dividend yield" mean? It is the last dividend payed in relation to the current share price. Comparing ...
glglgl's user avatar
  • 5,415
19 votes

Why is the dividend yield on the S&P 500 so low?

Why is the growth of the value of dividends significantly lower than the growth of the value of stocks in the S&P 500? The 500 companies that makeup the index determine if they pay their ...
mhoran_psprep's user avatar
18 votes

Are dividends exclusively a part of earnings?

Cash dividends are paid from the company's cash on hand. It doesn't matter where that money comes from. You might have earned it that year, previous years, or (rarely and foolishly) borrowed it or ...
RonJohn's user avatar
  • 50.7k
18 votes

Why do companies pay fixed dividends instead of fluid ones?

They DO pay one indexed to their performance. The dividend is a board decision that is revisited for every dividend paid. You just see the result, and as it is not changed, assume that it is ...
TomTom's user avatar
  • 11.5k
17 votes

Are ETF trackers fundamentally better than individual stocks?

I am mostly interested in long-term dividend-paying investments. Why only dividend stocks? The value of a stock goes down when they pay a dividend, so dividend stocks are (in my opinion) more ...
D Stanley's user avatar
  • 137k

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