how do dividends work?

gotmaintvtr

ive done a little bit of reading up on these but just wondering do people invest in a particular share because of the dividends paid ect?

if so what shares tend to pay well. its not something im looking to do im just wondering realy.

would it make sense if you was investing long term ect?

thanks

atypical

gotmaintvtr wrote: »

ive done a little bit of reading up on these but just wondering do people invest in a particular share because of the dividends paid ect?

Maybe not because of but largely based on dividends paid, yes. It's the high-yield portfolio concept where you buy shares for their income rather than their appreciation (though it's an added bonus of course ). A Google search will yield plenty of articles explaining the concept.

The only site I found listing yields was this one but it doesn't seem to be up to date considering they think Lloyds gives a dividend.

gotmaintvtr

thanks for that.

gotmaintvtr

so would it be fair to say someone like tesco's would pay a dividend.

also this is copied from the fundamentals of tesco

Dividend Yield 2.8

so what would this mean?

C_Mababejive

If you go along to https://www.iii.co.uk and check out the share dealing tools you can filter which cos pay what divi.

There are some good earners in there such as in the FTSE100 BT, vodaphone,Cable & wireless,UU etc. Buying shares with good yields can be a better bet than saving in the pathetic savings accounts currently on offer. It depends how you view risks.

gotmaintvtr

its sounding interesting now haha.
i dont mind a risk. do you need to invest a fair amount though to get a decent dividened? its more of a long term thing am i right in thinking that?

gotmaintvtr

ust looked at that and man group look the be the best if im reading it right.

sorry im quite new to all this and just started reading books ect

C_Mababejive

If only it were as simple....but not so. you see you need to evaluate the state of the company itself ,what sort of business its in and what price you buy it at.

There is no earthly use in buying a high yiled company if the price you buy it at is a little high,or its sector is suffering some pain,such that the price goes down as what you might gain on the yield is lost in the capital value.

Im not an expert but a good balance can be found in defensive stocks such as utilities/oil/gas/water /telecoms etc...

As an example Vodaphone/BT/Centrica/Northumbrian water etc pay fair divis,are a good price at the mo ,have potential for growth long term,and best of all,they sell products that most of us NEED.

If your thinking long term,you could consider holding such stock within a self select ISA . also buy on line using a broker who has low charges such as tdwaterhouse/iii and others.

gotmaintvtr

cheers for that. it always sounds alot simpler than it is. making money is never easy unles you just go to work like the norm.
its deff worth reading more into ect.

at the moment im just reading some books and picking bits up. then ask the odd question here for maybe some simple form of answer lol