The Basics Of Dividends
In the section below, we will teach you all you need to know to start your journey into dividends. Dividends, as well as most things with the stock market will become less scary the more they are understood. This section is here for you as an introduction to all the terms and basic steps you will need to get started.
Setting Up Your Way To Trade
At tradingfordividends.com we have used a multitude of different services to trade effectively. We personally use Charles Schwab. We find this to be the most effective site regarding the stock exchange, mainly because of the amount of information offered as well as being a commission free website.
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Robinhood is a fintech startup that enables investors to start investing in fractional shares with as little as $1.
Also please be aware:
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TDAmeritrade WAS a full-service brokerage with live customer service, various account types, and a wider range of investment options. It was absorbed in a merger by Charles Schwab. If you have assets in TD Ameritrade, please make sure to address this immediately. As the website is slowly shutting down. While you wont lose your assets, they may become more difficult to retrieve.
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What are dividends?
Dividends are a sum of money paid regularly by a company to its shareholders out of its profits or reserves. What this means is Dividends are a portion of the profits or reserves shared to owners of the company at certain points of the year. Traditionally it is annually, quarterly, monthly, or any other variety determined by the company. When you buy a share with the company, you officially own a “share” of that company. Quite simply, a piece of the business. Meaning you are paid profits from it.
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What is dividend capture versus trading for dividends?
Dividend capture is the process in which an individual buys a share immediately before the ex-dividend date, selling it immediately after the ex-dividend date. This way they make the positive from the dividend, successfully capturing the dividend with the goal of not losing money on the share outside of transaction costs.
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Trading for dividends is the process of using dividend capture to produce profit. It is then using that profit to buy new shares. That income will be placed into shares or trusts for long term investment to produce a source of income through dividends annually.
How To Place Your First Trade
All online trading systems have their own rules and regulations, as well as systems to use their individual sites to physically place your first trade. Traditionally it is as easy as attaching your bank account to the trading website, then as you begin purchasing shares they will be held in the system until you sell. All profits made on rising stocks, or losses will reflect directly in your online portfolio. While dividends will be either directly deposited in your account or will reflect in the amount invested depending on the company. All are different, so plan for both and do your due diligence.
How Dividends Pay
Dividends pay by directly adding the dividend to your account, as long as you own the dividend you will see the profits from said Dividend in your account on or immediately following the payout date.