Why Dividends Are Important To The Portfolio Of Every Investor
Companies that raise dividends regularly often fare well when interest rates rise. It's also important to remember that nothing lasts forever: newspaper companies and American car companies were great long-term investments for many decades, but even long-term investors should know how to recognize the end of an era when it arrives.
But finding shares that can pay them isn't easy. I believe that every company has an optimum level of dividend payout that the company discovers over time, as it matures. The September 2019 dividend payout will represent a 7% hike, by $0.0153 per share from the $0.219 prior cash dividend.
Investors perceive of these stocks as safer because they know that a cash payout will be coming soon. Again for simplicity, let's say that the entire $73.5 million is paid out as eligible dividends, and thus taxed in the recipient's hands at the top marginal rate on eligible dividends of 39.34%.
The constant reinvesting of dividend income enables outstanding compound interest that add up dramatically over time. A repeat of this performance in 2019 would leave the company with a cash balance of nearly £1bn at the end of the year, more than enough to continue with the plan to distribute around £750m to shareholders every year.
All 10 finance stocks are dividend payers. There has been an analogy for many years that dividends account for close to half of all shareholder total returns over time. To do so, take the current year's dividend per share divided by last year and subtract 1. This will calculate the dividend growth rate compared to the prior year.
With the markets where they are today, it is a perfect time to buy a wide range of stocks because virtually everything is down and there are opportunities, with high yields across the board. If Canada has a cross-border tax treaty with the country where the company is domiciled, at best an investor can get the foreign income tax credit on taxes paid in other countries, but there is no consideration for corporate taxes paid.
At this point in time any bad economic or political news could trigger a reversal in stocks in 2015 or 2016. I couldn't let people disregard such an awesome opportunity to invest in businesses not bet on stocks. You can get a basket of international dividend growth stocks by investing in a global dividend growth fund.