Profits from Dividend Payouts

Dividends are another way of getting extra money from some companies. Dividends can be tricky because management at some companies may need more funds to keep the company operating. The company may be in bad shape and this is why I stress "do your homework before buying." Typically I want my Dividend to be between 1-10%. Dividend payouts usually are quarterly, bi-annual, or yearly. Every company doesn't pay out Dividends, but that doesn't mean you can't profit off that particular institution. Dividends simply put, is sort of an interest payout to Investors. Companies that make profits will either payout some to Investors, whereas other companies may use the money to invest back into the company.

Set your account to "reinvestment." This allows your Dividend payouts to invest back into the company. Once reinvesting in the company it will automatically buy more shares into the company. By buying more shares it increases your equity value, Dividend, and you will start earning compound interest.

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