A little bit of corporate law
When a corporation makes money or profits from its business, it is required by law to declare dividends (out of its unrestricted unretained earnings) to its shareholders, the owners of the business. Dividends may be in the form of cash or property dividends. Property dividends are usually in the form of stock dividends.
Money just makes more money
A moment of contemplating additional wedding costs next week brings great surprise in the form of a substantial cash dividend! It is substantial enough to mostly cover some pre-wedding costs for next week.
As a recent convert from short-term stock trading to long-term trading, I don’t keep track of dividend payout schedules. At least, not yet. 😊 The cash dividend payout yesterday therefore came as a genuine surprise as I was sadly discovering how truly expensive it is to plan a wedding.
If you own this piece of dividend-paying stock you could probably relate. It is a blue chip, large capitalization company that is engaged in a business of public utilities. As a long-term trader, I now hold most of my stock holdings in blue-chip stocks. The price rarely makes any radical moves and yes, it gets really, really, really boring.
Making money while you sleep
Until dividend declaration comes and the boredom becomes truly worth it – in tangibly measurable terms – MONEY. As you have probably slept through the boredom of holding these dividend paying stocks, your money works by making you more money – while you’re sleeping. Your stock is like a chicken that lays golden eggs!
Now that’s certainly fun and a good argument for holding these blue-chip stocks as opposed to more exciting small cap stocks. But then, why not balance your portfolio and hold both? I’ve certainly been there and made profits too. It should certainly depend on your individual circumstances and needs.
Just make sure you don’t sell off the chicken, at the cost of your golden eggs. Always work to preserve your capital.
What dividend-paying stock do you hold? Drop me a line!
20 something lawyer