Dividends is a payment that companies make to their shareholders as a result of the profits generated by their business lines. It is also one of the variables in which thousands and thousands of investors look to make up their investment portfolio. This is because offer a performance that ranges from 3% to 8%. But the most interesting thing for your approaches is that you can use different strategies to benefit from this payment provided by some of the companies that are listed on the equity markets. Surely you are wanting to know them to put them into practice from now on.
One of the strategies preferred by savers is to constitute through dividends a fixed income within the variable. Regardless of its listing on the stock market. Will offer you a profitability higher than that generated from the main banking products (time deposits, paid accounts, promissory notes, etc.). These savings models rarely exceed 0,50% in performance. In addition, through dividends you will have a fixed and guaranteed income every year. Helping to maintain the liquidity of your checking account, above other considerations.
Another of the behaviors that you can have with these regular payments is to take advantage of the rises that their shares experience in the days before they are paid. to get rid of the investment. This is a more sophisticated strategy that is used with some frequency by investors with more experience in the financial markets. They are not looking for this performance, but what they want is to make profitable their operations at all costs. Even on this remuneration to which they are entitled but do not exercise at any time.
Dividends: fixed income on the variable
Another variant that you can get to is more classic. Consists in wait for prices to return to their previous levels, once discounted from the dividend payment. It will take a few weeks for this to happen. But in any case you will sell your shares solely with the benefits of the dividend yield. That is to say, in the direct investment that you will have made, you will not have obtained any profitability. It is one of the most effective ways you have to optimize the payment of this remuneration that equities provide you. Although it does not have much to do with what is the pure and simple investment.
The payment of dividends for some years now allows you two options. On the one hand, charge them directly and that they go to your checking account so you can do what you want with them. And on the other hand, the possibility of being able to reinvest them in the actions where you have taken positions. It will be a very personal decision that you will have to make after analyzing what you really want and what is the profile of a small investor that you present.
In any case, it will be convenient for you to know which are the scenarios where it is more favorable for you to invest this subscription that all shareholders receive. As a strategy for improve the status of your securities account. Not surprisingly, you can improve the margins that the bank provides you for dividends. Pay attention because it can be interesting every time this investment scenario occurs to you.
In bullish processes
When a stock is experiencing an upward process, you should reinvest the payment of dividends. The reason is because thanks to these operations you will have more shares, and therefore, greater possibilities that the yields increase. Instead of enjoying your liquidity. It will be a matter of having the money immobilized for a longer time. In exchange for an improvement in equity performance.
Long-term savings bags: if your investment is intended for the medium or long term, this movement will also be profitable. Not only will it allow you to increase your investment, but you will also be in a position to collect more money in the next dividends. Thus, you will increase your invested capital little by little. It is a very original way of creating a savings bag for the next few years. Not surprisingly, your approach is aimed at many years, even in the form of hereditary investment. It can be an excellent opportunity to raise your positions in the stock market.
Very solid values
Another strategy can be developed in very stable values that rarely suffer significant falls in the stock market. It will be more worthwhile to integrate the dividends in the investment instead of not collecting them immediately. Especially if you are not going to need that money for a long time. In any case, you will have no choice but to consider time limits to close positions in equities. To prevent any downward movement in the markets from causing part of these gains to evaporate, in addition to the investment itself.
Either way, the distribution of dividends among shareholders that will take place this year will be another incentive to enter equities this year. Because indeed, it promises to be an exercise full of good news for savers. Although also with some other disappointment in the form of a reduction in this remuneration for investors.
From this scenario, the main novelties offered by listed companies are that the return they will generate is quantified in a average profitability close to 4%. In any case, a few tenths below that produced last year and which marked one of the best records in terms of performance. Either way, it is moving under noteworthy regularity. Without many surprises and with this stability in the amount that will go to the savings account of small and medium investors.
Drops in performance
Not all of it is good news for savers who are aware of the evolution of dividends. Because there are a few companies that have reduced their amount. This is the specific case of one of the leading Spanish equities: Telefónica. Because the national operator has decided for this year to cut the payment it grants to shareholders. Since it has announced that it will distribute a net dividend of 2017 euros in charge of the 0,40 accounts, compared to the 0,55 euros of 2016 (year in which it was expected to distribute 0,75 euros). It is certainly not news that favors small and medium investors. But rather the opposite, because they are moving away from comparative positions, at least in the short term.
Other companies listed on the national continuous market have opted for the same strategy based on the containment of these payments. Although under some percentages that are not very significant. With a reduction in the yield per share that in any case does not exceed the levels of 10%. But that in any case discourages investors from taking positions in any of these Spanish equities. In contrast to those who are more favored by this distribution.
What can investors do?
Given the situation presented by dividends for this new year, there are many strategies that can be used to optimize the value of accumulated savings. From the most aggressive operations to others with much more defensive connotations to protect invested capital. Among them, the option of promoting faster movements than usual stands out. With a very clear and well-defined objective. It is none other than trying to get the best performance at their prices with the combination of this remuneration. Without targeting denser periods that are intended for the medium and long term.
Another alternative that you have at the moment comes from less static positions. Where your strategy will consist of opting for the securities that present a better dividend yield and that in turn show an impeccable technical aspect, or at least with a more or less clear uptrend. So that in this way, they are in the best of conditions to get the most out of the open positions from now on.
The third of your actions should be aimed at making a much more diversified investment than up to now. How? Well, very simple, opting for a Investment fund that is based on financial assets of these characteristics. You have many proposals where you can choose your favorite funds, both in the national markets and those from other geographical areas. Everything will depend on the profile you present as a small and medium investor.
Dividend-linked funds
Because in effect, there are a number of these financial products that base their strategy on incorporating these values. Globally, without having to choose a single company. Rather, it focuses on investing in a highly diversified basket of stocks. It is an alternative that you have on hand if you want greater security for your monetary contributions.
The main drawback you will have to avail yourself of this investment option is that you will have to assume more expansive commissions than through the direct purchase and sale of shares in the financial markets. With percentages that can rise to 2%. In which case you will have to dedicate a greater financial effort in hiring these funds. Although in return, you will have greater freedom to transfer it to other investment funds without any kind of penalty. In addition, these operations can be formalized at any time and without limit on the movements. As long as the funds come from the same bank.