{"id":2790,"date":"2021-11-04T16:09:00","date_gmt":"2021-11-04T13:09:00","guid":{"rendered":"https:\/\/www.robomarkets.com\/blog\/?p=2790"},"modified":"2023-08-09T17:19:46","modified_gmt":"2023-08-09T14:19:46","slug":"dividend-investment-strategies-real-cases","status":"publish","type":"post","link":"https:\/\/www.robomarkets.com.cy\/blog\/investing\/dividend-investment-strategies-real-cases\/","title":{"rendered":"Dividend Investment Strategies: Real Cases"},"content":{"rendered":"\n

The \"buy and hold\" strategy is the simplest strategy for making a profit on the growth in the value of shares<\/a> – you just need to buy securities and hold them for as long as possible. In this case, it's worth using technical analysis<\/a> to identify the best entry point with minimal risks.<\/p>\n\n\n\n

However, in the example of the growth of Apple<\/a>'s stocks, we can see a steep rise even after a swift decline. Let's recall that Apple's stocks fell to $142 in January 2019, but currently, their price is testing at $320. This shows us that the price more than doubled in just one year, which is remarkable.<\/p>\n\n\n\n

\"Apple<\/a>
Apple Inc stock price<\/a> chart<\/em>*<\/figcaption><\/figure>\n\n\n\n

Today, we shall discuss one more option on the stock market at the time of the dividend<\/a> payment. Here are the details, the serious advantages, drawbacks, and peculiarities.<\/p>\n\n\n\n

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<\/span>What are dividends?<\/span><\/h2>\n\n\n\n

Fundamentally, dividends are a share of a company's profit. If you are a dividend holder, you have the right to receive a part of the company's profit, which is divided among its shareholders. It's fairly easy to become a shareholder: you simply need to buy company stocks on the exchange, and they will earn you the right to receive dividends from the chosen company.<\/p>\n\n\n\n

For example, Apple Inc. is paying out dividends to its shareholders every quarter – four times per year. As a rule, the sum aimed for paying out dividends makes 30% of the company's net profit. The net profit is distributed over a week's time. Dividends amount to $0.77, so if you hold 10 Apple stocks, you will receive $7 as dividends. Over the period of one year, the stock price has grown more than twice, with dividend holders receiving extra passive income every time. Not bad at all!<\/p>\n\n\n\n

\"Apple<\/a>
Apple Inc stock price chart<\/em>*<\/figcaption><\/figure>\n\n\n\n

However, Apple Inc. has not always paid out dividends to its shareholders. In 1995, it was decided to invest all the capital in the business and the development of new products and services. Apple Inc. did not begin paying out dividends until 2012 when it was decided to initiate them again.<\/p>\n\n\n\n

<\/span>Dividend cut and the growth of the stocks<\/span><\/h2>\n\n\n\n

Information about the dividends on the stocks of a company can be found in the dividend calendar. The details about dividend payments are normally announced after the shareholders' meeting. This might happen several months before the actual payment of part of the company's profit to its shareholders.<\/p>\n\n\n\n

The dividend cut or the so-called registry closing day is the last day when the shareholder must hold the stock (buy the stock or already own it) to be eligible for payment of stock dividends.<\/p>\n\n\n\n

There are even such strategies in which the investor buys stocks before the dividend cut day to receive additional income as quickly as possible. On the other hand, there are investors who choose to sell their stocks before the dividend cut day, even if they had been holding them for several months. The number of traders with the intention of earning on dividends without effort grows swiftly before the dividend cut day, which provokes the growth of the stock price. The stock price declines immediately after the distribution of the profit because the traders sell their stocks as soon as they receive the payment.<\/p>\n\n\n\n

<\/span>What happens to the dividends if the stocks fall?<\/span><\/h2>\n\n\n\n

There are two different scenarios: attempting to make a profit on the stock price fluctuations, and on the dividends. If you bought 10 Apple stocks at the beginning of 2019 at the price of $145, you can now sell them at $318 and earn $1730. However, to receive funds, you must first make a sell operation on the exchange, and then start using the assets. You can make a profit on the stock price fluctuations by way of buying cheap stocks and waiting for the right moment to sell them at a higher price.<\/p>\n\n\n\n

\"Apple<\/a>
Apple stock price chart – dividends<\/em>*<\/figcaption><\/figure>\n\n\n\n

As for receiving income from dividends, there is no need to constantly buy and sell stocks to gain profit. In fact, if you're a dividend holder, you don't have to do anything at all. The company will pay a part of its profit to you in your capacity as an investor in the company. So, you don't need to sell your stocks. To receive dividends from a company, you just need to buy stocks<\/a> and hold them.<\/p>\n\n\n\n

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