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Dividends Are Still Valuable

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This week’s AAII Weekly Digest highlights these “must-read” AAII articles:

 

Cash Dividend Types, Dates and TaxesThough most investors know that a cash dividend is the distribution of money to shareholders, dividend terminology is not as well-understood. Terminology such as ordinary dividend, special dividend, ex-dividend and record date has unique and important meanings investors should be aware of.


John Buckingham

Though certainly not as sizable a contributor so far in the 21st century, dividend income and its reinvestment has comprised a significant portion of long-term stock gains over time. Even better, over the long term, dividend-paying stocks have delivered relatively better total-return performance than non-dividend-payers and generally have done so with lower volatility. While these stocks are not quite the Holy Grail, higher returns, relatively lower risk and generous income can make for quite a powerful combination no matter the direction of interest rates.

 

Researching DividendsWith so many companies of such diverse types paying dividends, even investors who don’t necessarily focus on dividend policy as part of their strategy should stay updated on dividend plans and announcements. Whether dividends are currently part of your strategy or will prospectively become part of your strategy, you need solid go-to resources online where you can find valuable dividend information.

Covered call writing is one of several ways options are traded. While often done on an ad hoc basis, one can assemble and manage a portfolio of covered call option positions as either a part of a larger portfolio or on a stand-alone basis. Dividend-paying stocks are attractive option writing candidates since the goal of a covered call portfolio is to generate income.

Our Member Question for this week is:

 

Which income-generating products are you currently investing in or likely to invest in?

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Vote to answer this week’s Special Question: What is your target annual rate of return on all savings and investments?

Last Week’s Results:

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Last week we asked our readers whether they are currently working in “retirement” or if they plan to do so, and what their motivation is to do so. The results are discussed at the AAII Blog.


Portfolio Building

“Easier said than done” is a common saying that applies well to developing an overall strategy for your investment portfolio. The basic concepts are relatively easy, but they become more complex and less clear-cut when it comes to applying them to real-world situations. This e-book, available exclusively to AAII members, is designed to bridge the gap between theory and practice.

 

 

 

The AAII Weekly Digest is one of the many benefits of AAII membership. To learn more, consider a risk-free 30-day Trial AAII Membership to start becoming an effective manager of your own assets.