Nothing at all, that’s what!
Collecting dividends, like sitting home and money arrives in your account without having to do anything… that’s the best fun of all. At least in a manner of speaking. Once you have purchased some shares that pay dividends, that’s when the real fun begins.
It might feel like dividends are free money, but they are not. Firstly, one has to purchase the shares in the first place, and undoubtedly it took labor to create the money to do that purchase. Then we accept the risk of buying the shares… how likely Is the company to continue paying dividends? And then the dividends arrive, and is not tax free.
So dividends are not free. For purposes of discussion, rain, snow, and sun are free. They come down on all, regardless of personal circumstances. However, dividends are not free in that they come only to those who have done the work necessary to receive them.
Some Sort of Free
But once the work is done to receive dividends, they keep on coming. They theoretically never stop. And that’s the fun part. If you own shares in several companies, then you receiving dividends frequently. Usually dividends pay out quarterly–four times a year. There are some exceptions, in that some companies pay twice a year, some pay once a year, some pay monthly.
Regardless of the frequency, you could, for example, be receiving dividends every month of the year. Which day of a month? It too varies. Every company chooses its date and usually sticks to a schedule. That means it is generally possible to know months in advance when your dividends will come to you.
Growth and Then Some
Some companies like to increase their dividends every year. Some keep their dividends steady for long periods of time, even years. Some companies might reduce or eliminate their dividends. It all depends on the company and their preception of their business conditions. And that is why we diversify.
What Ho, Diversify
Defined: “What Ho”: A greeting. Equivalent to “Hi! What are you doing?” or “What’s up?” So what’s with the diversify comment?
Keep all your eggs out of just one basket, that’s prudent. You don’t want your dividends to be in trouble because of one company’s problems. That is why we buy shares in more than one dividend-paying company.
Ready to get in on the fun? Let me know what you think, here.
The illustration of the cactus is from “Iconographie descriptive des cactées, ou, Essais systématiques et raisonnés sur l’histoire naturelle, la classification et la culture des plantes de cette famille” by French botanist Charles Lemaire, published in 1841. Courtesy Missouri Botanical Garden.
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