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Dividend investing

  • 17-12-2009 6:10pm
    #1
    AARRRGH
    Closed Accounts Posts: 12,382 ✭✭✭✭


    Hello

    I hope I can get some advice on this.

    I have a decent bit of savings and I want to invest some of it in the stock market. I am thinking of buying shares which pay a dividend. I am hoping to pick some shares in -

    1. A stable company which has slow but steady growth.
    2. A company with little debt.
    3. A company with cash reserves.
    4. A company which consistently makes a profit.
    5. A company which pays a dividend reasonably close to a savings account interest rate, i.e. 3%.

    I understand the market is always a bit of a gamble, but are there any obvious things I need to be aware of when researching dividend shares?

    Also, why don't more people buy dividend shares? I would have thought dividend shares should be a lot more attractive than shares which pay little to no dividend?

    Any advice appreciated. Cheers!


Comments

  • #2
    MrMatisse
    Closed Accounts Posts: 1,743 ✭✭✭MrMatisse


    Solid dividend paying companies tend to be older and many have limited growth prospects so their share price does not appreciate very quickly, thus they are not very attractive to investors.

    Maybe look at Imperial Tobacco or British American tobacco or Diageo as these companies match the criteria you have.


  • #3
    woodseb
    Registered Users, Registered Users 2 Posts: 876 ✭✭✭woodseb


    AARRRGH wrote: »
    Also, why don't more people buy dividend shares? I would have thought dividend shares should be a lot more attractive than shares which pay little to no dividend?

    there's an inherent trade off between dividend paying and non-dividend paying stocks...

    A stock that pays a dividend is telling you that they believe the cash is better off being given back to investors rather than reinvest in the company, while non-dividend companies believe investors are better served by reinvesting the profits in the business. Most of the time the difference lies in the life cycle stage of the business ie if its growing or maturing

    Ryanair's announcement today to return cash cos it couldn't justify the investment in new planes is a good example of this


  • #4
    makfli
    Registered Users, Registered Users 2 Posts: 157 ✭✭makfli


    MSN money .co.uk and Msn money .com. Have a filtering system whereby you can enter the criteria you require, eg Highest dividend, divi cover, lowest p/e, highest or lowest cap plus many other measures. Wall St and London quoted companies only I think.


  • #5
    strmin
    Registered Users, Registered Users 2 Posts: 315 ✭✭strmin


    AARRRGH wrote: »
    Hello

    Also, why don't more people buy dividend shares? I would have thought dividend shares should be a lot more attractive than shares which pay little to no dividend?

    If you are lucky to be in higher tax band, you'll pay over 40% tax on dividends.Very good reason for investors to look for growth stocks instead.


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