subject: Asx Dividends Decision Is An Important Aspect Of Stock Investment [print this page] What is a Dividend? What is a Dividend?
Dividends are corporate profits that are paid to shareholders of the company in the form of a check or re-invested shares or in other words we say additional shares or cash, as determined by the shareholder.
When a company makes profit it has some choices like it can retain the profit to re-invest it in the business. Keep the cash on hand for unfavorable days. Re-purchase own shares (for raising the value of the remaining shares). Pay out cash or additional shares to shareholders. Once a dividend is paid, it is your responsibility to keep our cash or to re-invest it. Australian Dividends have a special appeal for this reason, and particularly in times with high market volatility. It is most common for companies to pay out dividends each commercial quarter. Some companies pay out dividends semi-annually or annually. Many companies offer special dividend payments with no set schedule. If you really want to know how often a company pays out dividends, it is gradually labeled on historical price charts for that company.
In Australia, there are many investors who place their money in Australian dividend stocks. However, I see that number of stock investors know very little about stock investing. To clear the stock investing, let me share with you some common mistakes made by retail investors. One common mistake is buying stocks without knowing when to sell them. It is important to know that when to sell stocks because it dictates whether one would collect profits or acquire losses.
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When we invest, it is necessary that we keep a clear mind and stay realistic. When we invest, we have to avoid our emotions which affect our decisions. Emotional investing gives investment decision a good energy of human emotions fear, greed, anxiety and complacency, among others. Emotional investors make decisions under conditions where emotion overpowers their ability to apply rational thinking in acting or reacting to events in the market. The typical emotional investor depends on information from several sources, such as financial news media, word of mouth, friends and colleagues to guide their investment decisions, which are often times short term in outlook.
Billionaire investor Gorge Soros said, Its impossible for human beings to be emotionally detached when we invest, but the key is to learn how to control our emotions, to be as emotionally stable as possible, when making investment decisions.
So I want to tell you when you take decision to sell your stocks?
1.Sell when the overall stock market trend changes:- It is no matter that what stocks you buy it is blue chips, red chips, when the overall stock market changes from an uptrend to a downtrend or when the overall market direction reverses, it is time to sell all your stocks. If you are to look back at past trading trends, you would realize that in a bear market, stock markets typically all by over 50%.
2.Sell when stocks are over-priced:- How does investor know stock is over-priced or not? In answer to this, price earning (PE) ratio serves as an indicator to whether the price of a stock is reasonable or not. In that case, price earnings ratio is usually derived by dividing the stock price by its earnings per share. If the PE ratio is 20 times, it means that the company will take 20 years to obtain enough earnings to pay off your capital. Put simply, the return on investment is 1 divided by 20, or 5%. Thus, any stock trading at a PE ratio of 20 times or higher may suggest that the stock is over-priced, unless the company can grow at a much higher rate.
3.Sell when we made an investment mistake: - Sometimes, it might take us briefly for us to discover that our initial analysis of a stock is incorrect. In that case, we might have over-estimated the companys prospects and profits, or the company did not quite manage to execute their expansion plans as successfully as we had thought. Regardless of the investment mistake made on our part, we must not hesitate to admit our mistakes and sell those stocks immediately.
4.Sell when a better investment opportunity arises: - If you have already invested your money but discovered at that another stock has better prospects or value, you might want to sell some of your existing stocks in order to raise capital to invest in the latter stock.
In gist, successful stock investing in Australian dividend has more worth to do with when you sell your stocks or when you bought them. These approaches of selling stocks have served investors very well over the years and helped them to avoid the incurring losses during the stock market crash. It is my hope that this avenue would serve your asx dividend investment decisions well.For more information
