Hello Hiveans!
Friends, the best day of the month for employees is when they get their salary. Because that feeling is so satisfying in which you get your returns of your hard work but if I say today I'm going to tell you more satisfying moment better then salary.
The rich people secret in which they got a message that is "Dividend is credited". I have read a biography of John D RockefEller in which I found this line "Do you know the only thing that give me pleasure? It is to see my Dividends coming in" and when we relate this line with power of compounding then I understood that line actually.
There are two types of people in this world one is those people who's income is salary that stays with them till they work. The other people are those people who get their dividends which have high growth as compared to salary if they quit their work their income will grow as usually. Due to this rich get more richer and poor stay poor.
Today, I'll teach you this secret that what is dividends and their strategy? How to find dividends paying stocks? And also we I'll give you pros and cons of stocking.
Well, let's get started and make you more knowledgeable.......
There are two types of stocks in stock market.
Whenever a company earns a profit it has two options. One is company retain their profit and reinvest in own company for future opportunities. This will help in growth of company's shares prices.
The other option is if company don't want his profit for retaining or investing in own business because may be company has a lot of cash then it pays dividends to shareholders. By getting this, it means that we can earn income by two methods in stock market.
One when the stock price is increased and other one when company pays you dividend which is credited directly in your bank account. You don't need to regularly buy or sell that stock to get profit or monthly income. If you hold a good stock then you can get profit without working.
Now move to the next target........
You can go on any stock screener where you will find company's financial reports or information and graphs. You can use any screener website for example you can use ticker tape website. On this site, you can filter out some good stocks and also analyse them.
You can also subscribe their pro versions where you will find more information about any company like financial charts, graphs and historical growth of any particular company. In stock market, you should use technical knowledge but as well as common sense.
You can find many biggest companies on this site. Choose that company who's paying a good percentage of dividend yield. Dividend yield means how much company pays dividend as compared to share price. For example, if one share's price is 100 rupees and company paying 3 rupees as a dividend then it meant that company has 3% dividend yield you can assume it as a interest rate.
One thing should be in mind when you are choosing company always take analysis either the company will grow in future like if any company mining the coal and he is paying highest dividend then you should avoid it because electricity is present in almost all area due to this reason this company will regularly declining growth. Always choose that stock which has high rate of liquidity. Liquidity means those stocks that are being buy and sell at high rate.
In 2004, a investor buy 1000 share of ICT Company and they didn't sell their share and hold them for long-term. After that company has split that shares give him bonus share that is reached 1000 to 45,000. In 2021 he got 4.4 lakh as a divided per year. I have calculated the prices of shares in 2004.
I have retrieved the calculation from the manual report of that company in 2004. Investor invested 10 lakh in this company and buy 1000 shares in 2021 he got growth of 15% growth very year and his share value is increased to 92 lakhs. This is the power of stock market in which you can hold a stock for long-term and get your dividends to get Financial Freedom.
Let's learn some pros and cons or this strategy......
Biggest advantage of stock market is you can grow your wealth very fast as compared to salaried job. If you invest in high growth and young company in your 20s then the company will be matured when you reach in your 40s and it will be a dividend paying stock for you. Still there are many companies in Pakistan which growing and you can grow your wealth with them.
The second biggest advantage is you can start with very low investment in younger age. You can learn stocks and buy them even in the age of 18. You can start with 100 or 500 rupees. The third biggest advantage is better diversification. When you buy a property then it will be only one property in future but in stock market you can diversify in many companies. There are lots of more advantages of stock market. Now some people thinks there are also high risk in stocks market let's discuss the cons.
According to me there is only one disadvantage. You should have a good knowledge of stocks if you don't have information and knowledge of stocks you can be face a big loss. In every field knowledge of that field is most important either you invest in gold, property, or any other business. As well as your knowledge increased the risk will gradually gets down.
As the people don't know the power of compounding the people also don't have any knowledge of dividends. My biggest motive is to make you knowledgeable and helps you to grow your wealth and get financially free. I hope you have learned something. Thank you.
Signing Off MindGamer
