3/12/2023 0 Comments Target mytime![]() They may have other tax implications, and may not provide the same, or any, regulatory protection. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, administrative costs, withholding taxes and different accounting and reporting standards. You should not invest any money you cannot afford to lose, and you should not rely on any dividend income to meet your living expenses. The value of stocks, shares and any dividend income may fall as well as rise and is not guaranteed, so you may get back less than you invested. No liability is accepted by the author, The Motley Fool Ltd or Richdale Brokers and Financial Services Ltd for any loss or detriment experienced by any individual from any decision, whether consequent to, or in any way related to the content provided by The Motley Fool Ltd the provision of which is an unregulated activity. If you require any personal advice or recommendations, please speak to an independent qualified financial adviser. No content should be relied upon as constituting personal advice or a personal recommendation, when making your decisions. ![]() The content provided has not taken into account the particular circumstances of any specific individual or group of individuals and does not constitute personal advice or a personal recommendation. Any opinions expressed are the opinions of the authors only. We have taken reasonable steps to ensure that any information provided by The Motley Fool Ltd, is accurate at the time of publishing. Even if a company has high profits, a lot of debt may mean it does not have much scope to pay dividends. But should I invest in Tesco or B&M, Sainsbury or Ocado? I would look to see whether a company had a competitive edge that I thought could help it make profits in future.Īdditionally, I would always check what debt the company had on its balance sheet. For example, I may think that retailers will continue to have a large pool of customers in future. I would hunt for companies I expect to see strong future demand and that enjoy some competitive advantage in serving that demand. How would I find such companies? I would first learn a bit about how the stock market works and then look at businesses I felt were within my scope of understanding. That should help me lower the risk to my income if one of them starts to do badly. I would use the money I was saving each month to buy shares in some companies like this, if the price was attractive enough.Īs dividends are never guaranteed – and no one knows how well any one company will do in future – I would spread my investment over a diverse range of companies. So I would look for businesses I expected to generate large profits in future that would be surplus to the company’s own requirements. In other situations, it may make enough money but decide not to pay it out as dividends. Basically the easiest way to think of them is as a tiny slice of the business profits.Ī company may not generate enough cash to fund dividends. Earning extra income from dividendsĭividends are money a company pays out to its shareholders. That way, when I did have sufficient funds, I would be ready to act straight away. In fact, I would set one of these up immediately even if I did not yet have enough money to start buying shares. I would put this money into a share-dealing account or Stocks and Shares ISA. If I invested that in shares with an average dividend yield of 5%, I would hopefully get £30 each year in extra income. ![]() Saving £50 a month would add up to £600 in a year.
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