How to Get Cash Dividends
Instead of distributing profits to shareholders, a growing company will often choose to reinvest any cash surplus back into its business to fuel growth. Companies that are profitable but have reached near maturity — those with little potential to grow — are more likely to pay profits out to their shareholders as dividends. If you want to build an income from dividends, you'll need to identify stocks that pay a high dividend yield and make sure you're getting this paid as cash.
Other People Are Reading
Instructions
-
-
1
Look for stocks that pay a high-yield cash dividend. As companies are not obliged to pay dividends to their shareholders, identify businesses that have a history of doing so consistently. Consider spreading your investment over a number of dividend-paying companies' stock to ensure you get at least some cash income if one or more decides not to pay a dividend.
-
2
Instruct your stockbroker to buy up the shares you've identified and make it clear that you want any dividend paid in cash. Companies will often issue dividends in stock and your broker may reinvest any payments you receive if you have a managed portfolio.
-
-
3
Monitor the performance of your cash dividend-paying stock. If the yield rate drops on any of your investment, consider looking for a higher paying home for your money.
-
1
Tips & Warnings
Some holders of a company's preferred stock may receive a fixed-rate dividend return. Holders of common stock will usually be paid a variable yield.
Any money you're paid as a cash dividend counts as taxable income.
References
Resources
- Photo Credit Stockbyte/Stockbyte/Getty Images
