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High-Dividend Stock
Feb. 28th, 2008 06:27 pmI have decided that my next investment is going to be in a high-dividend stock, for the following reasons:
1) Diversity - most of my current stocks are growth stocks, where the money you make is capital gains.
2) Dividends tend to increase with the stock price so that the yield keeps looking good. But if you bought at the old, (usually) lower price, your yield goes up. That's so much cooler than buying a bond or CD.
3) All those boomer retiring people are going to be wanting high-dividend stocks so they can try to live off dividends, which is a good idea. I want to buy some before they run up the prices into the stratosphere.
And I have picked which stock I'm getting: Pfizer. Here's why:
1) They are a real company unlikely to fold in the near future.
2) They have a high yield right now. It's higher than my online checking account interest rate and than my credit union's CD rates.
3) They have a long history of raising the amount of the dividend every year.
4) The price is good right now, by which I mean below its top price.
5) It's mostly about pharmaceuticals, which will become more profitable as boomers age.
Pfizer has a direct stock purchase plan. For theirs, they pay the fees for buying the stock. That's sort of like it being free except that the fees count as income for income tax purposes. They charge $15 plus a per-share fee to sell (except when they want to encourage people to sell). That's more than double what my discount broker charges. But I tend to sell in bigger lots than I buy in, so it's probably still cheaper overall. I think it might also be possible to transfer all your stocks to a broker for free, and then have the broker sell them more cheaply!
You also can have your dividends automatically reinvested, even if it requires buying partial shares. I used to think that was a great idea, because then those dividends can keep working for you instead of sitting in a low-interest account until you build up enough to justify the trade expense. But now I'm not so sure because now I realize that calculating the cost basis for tax purposes would be a royal pain. (If I sold after 20 years, I'd have 80 quarters of buys from dividends on which to calculate the current price minus the price I'd paid.) But they also have a way to automatically deposit your dividends somewhere. I think I might prefer that. I could quickly get them to a place with decent interest. With my current broker, I have to call them and ask them to mail me a check, which seems rude for only a few bucks.
Sorry, this is all very exciting to me. Do any of y'all have thoughts on investing in high-dividend stocks, using direct stock purchase plans, automatic dividend reinvestment, the Pfizer company, or any related or unrelated issue?
My apologies to my low-income and unemployed readers. I don't mean to rub it in.
1) Diversity - most of my current stocks are growth stocks, where the money you make is capital gains.
2) Dividends tend to increase with the stock price so that the yield keeps looking good. But if you bought at the old, (usually) lower price, your yield goes up. That's so much cooler than buying a bond or CD.
3) All those boomer retiring people are going to be wanting high-dividend stocks so they can try to live off dividends, which is a good idea. I want to buy some before they run up the prices into the stratosphere.
And I have picked which stock I'm getting: Pfizer. Here's why:
1) They are a real company unlikely to fold in the near future.
2) They have a high yield right now. It's higher than my online checking account interest rate and than my credit union's CD rates.
3) They have a long history of raising the amount of the dividend every year.
4) The price is good right now, by which I mean below its top price.
5) It's mostly about pharmaceuticals, which will become more profitable as boomers age.
Pfizer has a direct stock purchase plan. For theirs, they pay the fees for buying the stock. That's sort of like it being free except that the fees count as income for income tax purposes. They charge $15 plus a per-share fee to sell (except when they want to encourage people to sell). That's more than double what my discount broker charges. But I tend to sell in bigger lots than I buy in, so it's probably still cheaper overall. I think it might also be possible to transfer all your stocks to a broker for free, and then have the broker sell them more cheaply!
You also can have your dividends automatically reinvested, even if it requires buying partial shares. I used to think that was a great idea, because then those dividends can keep working for you instead of sitting in a low-interest account until you build up enough to justify the trade expense. But now I'm not so sure because now I realize that calculating the cost basis for tax purposes would be a royal pain. (If I sold after 20 years, I'd have 80 quarters of buys from dividends on which to calculate the current price minus the price I'd paid.) But they also have a way to automatically deposit your dividends somewhere. I think I might prefer that. I could quickly get them to a place with decent interest. With my current broker, I have to call them and ask them to mail me a check, which seems rude for only a few bucks.
Sorry, this is all very exciting to me. Do any of y'all have thoughts on investing in high-dividend stocks, using direct stock purchase plans, automatic dividend reinvestment, the Pfizer company, or any related or unrelated issue?
My apologies to my low-income and unemployed readers. I don't mean to rub it in.