As we were saying in the previous post, with stock securities we may earn or lose money on the purchase value, it is technically called trading.
We may also consider the possibility of keeping them for a few years – buy and hold – and in the meantime, obtain the dividends distributed by the companies, once a year in Europe, usually around May-June, while in the USA dividends are divided into four cedole.
Obviously, for your portfolio to include securities with dividends you need to:
- Pick leading companies in their sectors, not only in size, but especially as regards innovation, dynamism, growth, strength and solidity. To do that, you need to monitor these companies for quite a while and understand their solidity and possibilities of generating revenues; over the internet there are several websites offering in real time stock values and data on companies’ trends, both current and past.
- Study their fundamentals, i.e. the history in their numbers, what they have previously distributed and their projections in the medium term. Again, on the web we may find these data by visiting the companies’ websites.
- To buy and hold you have to almost forget about your stock investment. I say “almost” because actually it is always desirable to follow the trends on the market, but keeping a detached profile knowing that this is a match played in the medium-long run.
- A good stock portfolio can give a yield above 4% yearly which – considering current rates – is quite good!
Thus, to sum up, we may say that if you analyze your situation well before creating your own stock “little garden”, with no hurry and waiting for the best moment, you will probably have stock growing in their value over time and which will give you an interest on the invested capital.