Questions about dividends

Discussion in 'Ask any question!' started by macnerd, Jun 9, 2019.

  1. macnerd

    macnerd New Member

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    I'm retired & want to open a brokerage account. I don't want to do trading or options. I want to keep it simple. I just want to reinvest dividends & capital gains & use dollar-cost-averaging.

    Let's say that I have $10,000 to invest. Let's say that I buy stock that costs $100/share. I can buy 100 shares.

    I know that the hypothetical company from which I bought 100 shares pays X dollars per share. If the dividend is $1/share, the dividend is $100. Is there a name for that ratio? There are so many technical terms for stock investing!
     
  2. Gray Wolf

    Gray Wolf Well-Known Member

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    Total dividend divided by number of shares is not a ratio that is particularly useful. Best ratio is total annual dividend divided by the cost per share which gives you the percentage yield.. I like to push the daily chat in here so if you are interested join us in Live Chat (click chat in the menu bar above) and in there go to #dividends room and checked the pinned messages. Ping me in the chat if you'd like I'm there as @Gray Wolf.
     
  3. macnerd

    macnerd New Member

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    The dividend price will always be less than the share price, won't it? If 1 share costs $100, I doubt if the dividend would be $100. Let's say that the dividend is $1, then the dividend will be 1/100th of the share price. What is that ratio called?

    I need to supplement my retirement income thanks to inflation raising the cost of everything. I have an IRA with over $400,000. It took decades to get to that amount. I don't know how many more years I have on this earth. It's all in the stock market & that makes me nervous.

    I do have a money market account with $30K+ in it. I want to use that as seed to open a brokerage account.

    I do want to meet with a financial planner at my bank.
     
  4. Gray Wolf

    Gray Wolf Well-Known Member

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    I do all of my investing within my IRA. I don't know your age but at some point you will hit mandatory distributions. I use TD Ameritrade and my IRA is with them. I had them help me take a percentage of my money and built a 20 year CD Ladder. I have enough that mature's each year to cover my mandatory distribution and have it auto sent to my regular bank on a monthly time frame. I then have about 60 percent of my portfolio in dividend stocks. I try to keep to the solid companies that pay a reasonable percent yield but I don't "chase" yield as that is dangerous. The companies you can get positions in are many that can be what they call SWAN stocks. (sleep well at night). Here is a link to a list of companies that have raised there dividend once a year for over 50 years through several recessions without cutting the dividend. https://1drv.ms/x/s!ApcKqV3khCnAgdssLGVcEWI4fsz7fg Feel free to save your own copy.

    This link: will show you a video that talks about that list. I have several other spreadsheets that have solid companies that have paid dividends for over 25 years but I don't want to overload you. I don't discourage discussions with financial planners by any means but the do tend to have "boiler-plate" type suggestions so be sure you keep in mind that those won't fully accomplish what you have in mind. Good luck...
     
  5. macnerd

    macnerd New Member

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    HMMM! My bank is Suntrust &, I think, that they have self-directed IRAs. It would be redundant to have BOTH a brokerage AND a self-directed IRA. Rolling my IRA over into a Suntrust IRA wouldn't be a problem. I suppose that I can't deposit money in the IRA since I've already started withdrawing. I'd have to work with what's already in the IRA.

    Intriguing!

    I just turned 71 & I don't know how many more years I have on this planet. I just started withdrawing from my IRA this year. I've read online about CD ladders.

    So, using the 1st stock in your spreadsheet, Coca-Cola, the share price is $48.01. The dividend yield is 3.3%. I reckon that yields a dividend of $1.58433. Is that correct?

    Using my hypothetical stock:
    1 share = $100
    Dividend = $1
    Dividend yield = 1% Is my math correct?

    I reckon that the higher the dividend yield, the riskier the stock is.
     
  6. Gray Wolf

    Gray Wolf Well-Known Member

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    No, the yield is 3.1%. KO is currently selling at 51.49 and pays an annual dividend of 1.60 a share. 1.60 divided by 51.49=3.1 percent. That is the yield. They pay quarterly so 1.60 divided by 4=40 cents per share per quarter. Also, if you are 71 (same age as me) ;) Then you are correct, you cannot add to the IRA from outside sources. You are also in an RMD situation. (Required Minimum Distribution) and have a certain amount you must withdraw each year.
     
  7. Stoch

    Stoch Well-Known Member

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    Coca Cola's dividend is currently 1.60. The dividend becomes riskier after a point, if the cash flows cant support the payout they can be cut. however, it generally reflects the type and maturity of the business. REITs (real estate investment trusts) must issue a large percentage of earnings as dividends by their business charters. Large companies that have matured will also distribute earnings as dividends, like coke and now microsoft, which previously reinvested earnings after they started and grew, then stated paying a dividend for investors as they leveled off. Utilities are a good example of stable stocks that currently pay 3-4%. They aren't going to really grow quickly (or fade away).
     
  8. macnerd

    macnerd New Member

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    I've read about REITs. I've read that the taxation is complicated. I've read about laddered CDs. I definitely need a financial advisor/broker.
     

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