Im confused on dividends, could someone dumb it down for me?

Discussion in 'Ask any question!' started by Daniel Lozano, Aug 26, 2020.

  1. Daniel Lozano

    Daniel Lozano New Member

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    Hello everyone, for a while I have been researching stocks and talking to my coworkers about them. I have been saving some money each check and I was gonna make some purchases. I know how basic stocks work, but then there is dividends. I have be looking into $T, its around 30 dollars and it yields a few dollars a year. My main confusion comes from how does a dividend make you money? If you buy 1 T dividend then it would take you 10 years to see any profit, or am I wrong? Im probably gonna find 1 or 2 dividend stocks and invest my money into those for a while, buy multiple dividends. I dont get how you are to make money from them, I was thinking that maybe if $T goes up then it makes your annual payout go up? I dont know most of the articles I read seem to make it seem like you have to wait years and years to see any profit (but I know that im not gonna get rich from stocks anytime soon, its a game of waiting in some stocks) Does anyone have the dummies version of how these are suppose to make you money? Or is it just something that when im around 60 ill be thanking my 22 year old self for buying into them
     
  2. StockJock-e

    StockJock-e Brew Master
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    One share of AT&T is currently $30.

    The current dividend is $2.08.

    Meaning, at the end of the year, if you held T through all four quarters (when dividend is paid) you will have +$2.08 in your account.
     
  3. Onepoint272

    Onepoint272 2019 Stockaholics Contest Winner

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    ...and you will still have the share of T in your account which can be liquidated at whatever the market price is then, or held to generate more dividends.
     
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  4. A55

    A55 Well-Known Member

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    You get paid the dividend. That's how you make money. $T pays 52¢ per share, per quarter. 10 shares will pay $5.20. 100 shares will pay $52.

    Every 3 months, you could do whatever you want with the payment. $0.52 could be enough to buy a banana. Or you could save it under your pillow. Not telling you what to do. I reinvest my dividend.

    Ultimately, as the stock price increases, with any stock, you make money by selling the stock. You make money every time the stock pays a dividend. Not all stocks go up in value. Not all stocks pay a dividend. Dividend reinvestment is not for everyone. Some people buy dividend stocks for income.



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  5. Blvdm50

    Blvdm50 New Member

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    The above poster explained it well. T will pay you 52 cents, per share, that you bought at the end of each quarter. You don’t buy an actual dividend. A dividend is a payment made to you from the company. You don’t need to own the stock for the whole quarter either, only two business days. If you aren’t investing much, it might not be a bad idea to come up up with 3, 4, or 5 companies that pay decent dividends, put your money into one company, hold it for a few days, sell it more than you bought it, then do the same with stock 2, 3, 4 etc. then you have lined up several dividend pmts when the quarter ends. 4 or 5 dividend payments of $5 each is a nice little chunk of change for beginning small investor. Can confirm. Am a small investor.
     
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  6. A55

    A55 Well-Known Member

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    We all want to sell for more than we paid. What do you do if price goes down?
     
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  7. Onepoint272

    Onepoint272 2019 Stockaholics Contest Winner

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    @Blvdm50 's strategy does seem to work in this Fed-driven bull market at least that is, until it doesn't.
     
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  8. 姑爺仔

    姑爺仔 Active Member

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    Chasing dividends is a risky game.
     
  9. Blvdm50

    Blvdm50 New Member

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    It is a risky game to chase dividends. Ive done it before and it worked out. Not a practice I live by. I was prepared to hold until it recovered. I chose companies that I was confident wouldn’t be too volatile.
     

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