Investing in dividend paying stocks.

Audaxer

tinners93 wrote: »

I understand that and that is going to have an adverse effect on directors of private LTDs that draw profits as dividends.

For an individual like myself that wants to invest 2k-3k in some shares, it's not going to have any effect. The dividends paid are going to be minimal compared to the allowance.

As you are young and have a good salary, myself and some other posters above are surprised you are wanting to invest for dividends. Most people in your position would find it more beneficial to be investing in globally diversified funds for growth rather than dividend income.

Thrugelmir

You can save up to £4k a year into a cash LISA. A better option if house purchase is your aim.

dividendhero

ColdIron wrote: »

I'd echo the post above, why dividends at 24?

Providing they're re-invested then owning good divi shares at young age makes perfect sense in my book

ColdIron

I agree but there are many ways to skin a cat and while dividend reinvestment is a time tested strategy, with a 40 year investment horizon I might cast my net a little wider

Thrugelmir

Audaxer wrote: »

As you are young and have a good salary, myself and some other posters above are surprised you are wanting to invest for dividends. Most people in your position would find it more beneficial to be investing in globally diversified funds for growth rather than dividend income.

Growth is harder to identify though. A lesson many learnt in the tech boom era. Finding the next Apple isn't that easy. With the vast majority failing to deliver.

jimjames

tinners93 wrote: »

I work in the tax industry with some quite wealthy clients. I've been noticing that some shares have a quite good return on them. eg LGEN dividends had 5% return on investment 16/17.

I think you need to do some more research. 5% return is nothing compared to many funds last year that returned 25% or more.

economic

globally diversified funds such as vanguard include growth and div stocks. its best to have a mix of both.

i personally have global tracks, US trackers, managed funds, trusts and single stocks. single stocks and trusts allow me to invest in areas i think will outperform. managed funds allow me to pick good managers to benefit from their expertise. trackers are the bulk of my portfolio and give stability to the portfolio.

Ifts

tinners93 wrote: »

Do I have to go through a broker like Hargreaves Lansdown or IG share dealings or can I do them manually?

For what you are wanting to do you could use someone like X-O.co.uk share dealing services (£5.95 per trade) for a cheap method of buying the shares - its free to open and no annual account charges.

What markets can I deal in?

http://www.x-o.co.uk/how_to_use.htm#11

Also this site maybe of interest to you: http://www.dividenddata.co.uk/

It's worth noting that if you have not got a S&S ISA then its best to set one up and invest via that first (X.O also offer an ISA Account) - by using the ISA wrapper all dividends are tax free and there is no CGT on any profits and no record keeping needed. It may not feel worth while going via the S&S ISA route when starting to invest but it should benefit you in the long run. I wish i'd used my full ISA allowance when I started rather than investing outside the ISA wrapper first, especially now with the tax free dividend allowance capped at £5K outside the ISA.

Thrugelmir

dividendhero wrote: »

Providing they're re-invested then owning good divi shares at young age makes perfect sense in my book

Cash generative companies though not simply picking those with high yields. Those that have high yields are rated as such by the market for a reason.

Malthusian

Some years ago I bought a few dividend-paying, cash-generative, blue-chip stocks on the basis that they were very unlikely to go bust or permanently lose value and the reinvested dividend yield would provide a good return over time, especially with no fund management fees to come out. Unfortunately the blue chips I bought included BP and one or two other stinkers and the steady reinvestment of dividends never made up for the capital loss. When the time came to sell the portfolio I just about broke even on the individual shares. Lesson learned.

There is nothing special about dividends. If a company makes a profit then it either chucks it out the window to its shareholders or it reinvests it, or does a bit of both. To someone investing for growth it is largely irrelevant whether the companies they hold reinvest their profits into the businesses or pay them out to the investor who then reinvests them within the businesses. Obviously some companies have good opportunities to reinvest within the business and others don't, but I'm not interested in trying to guess whether they're getting it right or not - that is the kind of thing I leave to the market by investing in trackers.