we will be discussing what our dividend
stocks what our dividend stocks that's a
good question that many people who are
new to this stock market are asking I
know there's a lot of intermediate level
videos out there and they assume that
you know what dividend stocks are you
know what dividends are in this video I
will be talking to you as if you knew
nothing about dividend stocks about
dividends if you're completely new to
the stock market we're gonna be talking
about dividends and dividend stocks as
if you're starting from scratch from the
very basics I will be explained to you
very clearly what are dividend stocks so
that you can apply this information to
your portfolio and to your investment
activity and the stock market so let's
begin when you're buying a stock you're
buying a piece of the company so if you
buy one share of Microsoft if you buy
any shares of stock and Microsoft and
technically you are an owner of
Microsoft so you can go walking around
saying I'm an owner of Microsoft it's
it's very true it's technically correct
because you bought a share stock which
is a representation of ownership in
Microsoft so if you buy a stock you're
an owner of the company this is
important this will tie in later if that
company is making a ton of money in
Microsoft for example if they're making
a ton of money and they don't need that
money for operational purposes they
don't need it for operations then
they'll be like we have all this money
we don't need it let's reward the
stockholders let's reward the
shareholders this money let's give them
cash you know let's give them money in
the form of a dividend that's what a
dividend is so basically the company is
just sending money to your brokerage
account they're sending money to your
investment account in the form of cash
just because you own the stock in that
company because technically you own the
stock of the company that you're an
owner of the company so they're just
rewarding you for being a shareholder
they're rewarding you for being an owner
of
Bini to give you cash that's called
dividend you need to know that companies
will have different amounts of stock
some companies they'll have a million
shares of stock other companies will
have a billion shares of stock so it
just depends on the company let's go
over this scenario let's say a company
has a million shares of stock let's say
they have a million shares of stock and
they want to give away a million dollars
you just do simple math million shares
of stock and they want to give away a
million dollars of cash so for each
share of stock if you own one stock of
that company you will receive $1 of cash
because a million dollars of cash
divided by a million shares of stock
will equal one dollar of cash per stock
so if you own one stock in that company
they all send you a dollar of cash to
your brokerage account to your
investment account if you own five
shares of that company they will send
you a dollar per share so they'll send
you five dollars of cash to your
investment account it's gonna appear in
your cash balance in your investment
account
that's the dividends you need to know
that not all companies pay a dividend
it's totally up to the company that's
why when someone says it's a dividend
stock it just means that that company or
that stock is paying a dividend there
are three key dividend dates that you
need to know there's a declaration date
there's the ex-dividend date and then
there's the payment dates the
declaration date that's the day when the
company just announces hey there's gonna
be a dividend you know they're declaring
that there's going to be a dividends as
simple as that
that's the declaration date is when the
company announces that there's going to
be a dividend the ex-dividend dates is
the day that you just
- boom you need to be in the stock
before that dates you need to hold the
stock before that date the ex-dividend
date in order for you to qualify for you
to receive the dividends so if you're
like oh that company is gonna pay a big
dividend if you get it if you buy that
stock before the ex-dividend dates and
your holder on record on that date
before that date then you will get the
dividend if you buy it that stock on the
ex-dividend date or after you will be
disqualified from receiving that
dividend because it's too late
so the ex-dividend date is a very
important dates the payment dates that's
the date that you will actually receive
the dividend that's the date that you'll
actually receive the cash in your
investment accounts so going in order
the company would declare dividends if
you hold the stock before the
ex-dividend dates then you'll get paid
that dividends on the payment date so
those are the key dates so you need to
know regarding dividends you are going
to get taxed on your dividends because
that dividend is taxable income even if
you reinvest the dividends or if you
leave that money that dividend money in
your brokerage account in other words
you don't withdraw it back to your bank
account in either scenario you're still
gonna get taxed on that dividends the
amount of taxes you will pay on
dividends it depends on whether they are
ordinary dividends or qualified
dividends ordinary dividends they're
gonna get taxed at your regular rates
qualified dividends will receive better
tax treatments in order for your
dividends to be qualified events it's
gonna depend on the company from where
the dividends are coming from so things
like that that's out of your control it
also depends on if you held the stock
for more than 60 days before the
ex-dividend date so you're holding
period when you look up a stock that
pays a dividend you'll see in the stock
summary it's gonna say yield the yield
that just means the rates of how much of
a dividend that stock is paying the
yield helps you picture basically the
rates of how much you'll be earning you
know for example if the stock says I
yield a 4% that means if you put in if
you bought $100 worth of that stock and
you held it for a year you would with
you would receive four dollars of
dividends because if the yield is four
percent just think about it just think
about it like a savings account so if
you put a hundred dollars into savings
accounts and the yield is four percent
then you would receive four dollars an
interest income it's the same concept
with dividend yield for a stock so if
you bought $100 worth of stock in that
company then you can expect four dollars
worth of dividends for the year if the
yield is four percent that's the easier
way to conceptualize it so a good
question a good question is should you
go and try to buy dividend stocks with
the highest yield you know for example
you're gonna see you're gonna see given
us some dividend paying stocks they're
gonna have yields of 20% honestly in my
opinion if you see a dividend stock with
the yield of a 20 percent 25 percent 30
percent
I see red flags it's not that it's a
scam or anything the thing is that it
just means to me in most situations that
the dividend is unsustainable at that
level when it sounds too good to be true
it usually is usually when the dividend
yield is like 20 percent 25 percent 30
percent that's very temporary and
usually what will happen is that they
will reduce the
a lot of times it will be reduced
substantially or many times they'll just
cut it to zero they'll completely remove
the dividends it usually is a signal of
something's going wrong or something's
going bad with the company that's just
from experience so when you see
something like a 20 percent dip then
you'll just be careful a lot of times
most of the times it's just too good to
be true a good question is how often do
companies paint dividends it depends on
the company's most dividend most
dividend stocks they will be paying
dividends quarterly so they're going to
be paying dividends every three months
it's kind of like a set a regular
schedule so it's very predictable other
stocks such as REITs real estate
investment trusts real estate investment
trusts they will pay a dividend monthly
so each month they will pay a dividend
other stocks other dividend paying
stocks will pay an annual dividends
other stocks they will pay a
discretionary dividend just whenever
they feel like it so it just depends on
the company our dividend stocks the best
type of stocks not necessarily it just
depends on your investing goals if
you're trying to go for maximum gains
dividend stocks they're usually more
mature stocks so they're gonna offer you
less risk but they're also at the same
time they're gonna offer you less reward
in that situation if you're just trying
to Maxim if you have a very long
investment horizon and you're trying to
maximize growth the prioritized growth
in that situation you would not want to
go too heavy on dividend stocks so it
just depends on your situation you know
if you're trying to go for more stable
companies or more profitable companies
that dividend stocks would probably be a
better fit for you in that scenario if
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if you do use those links when you sign
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up bonus it could be in the form of cash
or it could be form in the form of free
stocks you can also see our other
tutorial videos those videos are really
crafted for the people who are very new
to the stock market you know they're
starting from zero we're also going to
be making intermediate level videos
about the stock market and investing as
well as well as advanced videos but we
want to build from the bottom up and
help you become a better investor thank
you so much for tuning in and we'll see
you in the next video