My first ever dividend

Brenda Irwin

Brenda Irwin

I got my first ever dividend in my account yesterday. On the one hand its terrific I get money paid for doing nothing except holding shares; on the other hand I'm 44 yrs old and it's my first ever dividend. Here's hoping its the first of many such dividends. :)
 
I love your constant enthusiasm Brenda!

So many property investors just refuse to open their eyes to that other investment "marketplace"!
 
I just got my first ever dividend too... T3 shares & was pretty impressed with it... $540 for an $8K payment... plus I have to pay the second installment of 6.5K soon... I hope to do more shares soon
Steve
 
How is the dividend worked out is it different for each share and calculated each $1,000 worth of shares or whats the go with how it's calculated?

Is it kind of like to make it worth while holding shares if it's not rising then it's to justify holding them through dull times (if it's dull times) instead of people opting to put there money in the bank.

Still they are good!
 
Jaffasoft said:
How is the dividend worked out is it different for each share and calculated each $1,000 worth of shares or whats the go with how it's calculated?

Is it kind of like to make it worth while holding shares if it's not rising then it's to justify holding them through dull times (if it's dull times) instead of people opting to put there money in the bank.

Still they are good!
Click to expand...

After time it absolutely is. It is also a reason to invest in them alone. Some people reckon price is a distraction and for long term investing yield is key. But that is a whole new long post in itself.

After 10+ years you could be earning 50% + pa on some shares! Imagine buying $200K worth and reinvesting divvies until retirement :eek:
 
Brenda, I think I am sharing your joy and amazement. I love the fact one can buy shares for a "small" amount (say $10k) and get a return (dividend) pretty quickly.

For me it goes...

I hold "good" shares (like banks) that increase in capital value (eventually)...
AND I get paid (the dividend)
AND I get extras (tax credits)

I've been rethinking my "property is the way to riches" philosopy, particularly as we have our hands full with our current project (11 bedroom house). I'm beginning to think that shares are a good way to generate income for living off (without having to sweat for it) and property is a good way to hold capital/wealth. Due to the different LVRs usually available for shares and property, it is property that is at the start of my investing, and has let me get a boost up. Now I'm turning away from it, but I expect I'll be back someday.

Anyway, here is (today's) plan: - I'm at stage 6

1. Buy, pay off PPOR
2. Buy IP #1 (leveraged off PPOR)
3. Buy IP #2 (CG & paid off part of IP#1, lump #1 and #2 together, release equity from PPOR)
4. Buy IP #3 (leveraged off PPOR)
5. Realize there must be a way to make income to live off and not work for someone else
6. Discover shares...
7. Become an investor & live off dividends (and IP income)
8. Put "access" wealth into property.


Lindy
 
Good on yer Brenda. There's nothing like some positive reinforcement (ie cash), to encourage further income producing behaviour. So glad you found shares. I ran shares through my SMSF until it could afford to buy a couple of IP's. Now I use the rent from them to buy more shares....tis just soooo addictive.
 
It is nice to see either property or shares grow in value but unless you sell them, you can't buy groceries with that growth unless you sell or borrow against the increase.

Capital growth seems to be the easy bit. I just got one of my IP's revalued from purchase price of $145k in 2004 to $220k now. The particular shares which I just got paid a dividend, SOL were bought on a loc less than 2mths ago for $55,282.80 (plus broker fees). They have grown over 3.5% in that time to date.

Generating a permanent passive income which grows faster than inflation seems to be much harder. That is my primary goal and it is going to take a clever combination of net rent, dividends and deposit interest.
 
You could look at buying shares as being like buying an annuity. The value you place on that future income stream (the price of the share) should be your assessment (guess? wishful thinking?) of the total anticipated dividend returns multiplied by a discount factor which should be the "risk free" rate of return available plus a "risk" factor. That's a spread sheet function. The hard part is guessing how much that div will increase year over year. It is further complicated by the fact that, for everything other than a mine, the entity is assumed to have infinite life but how long do they live?

Serious investors buying long term do these sort of sums. Us punters scratch some numbers on the back of an envelope, and even then only for mines, which have a "life".

A company which is never going to pay a dividend has no worth. OK, I know Microsoft never paid a div until recently but it has enormous sums "in the bank" and big income streams every year. You would buy MSFT knowing that you, or the guy who buys from you, will eventually share the kitty so it has real value.

Hope I haven't bored you with basics but I'm a believer that good companies, miners in particular, should pay their owners. Self funded retirees can't eat share certificates. That's why they love the banks which do pay out a larger share of earnings than most industrials.
 
Jaffasoft said:
How is the dividend worked out is it different for each share and calculated each $1,000 worth of shares or whats the go with how it's calculated?
Click to expand...

Every listed company is different but the general rule of thumb should be as follows:

If the company can potentially continually reinvest its earnings at an expected high Return On Equity (ie. 15% plus) than that company should ideally pay out a low % of its earnings in dividends payments to shareholders to continually attempt to increase total shareholder return.

However, if the company does not have the ability to do the above then it should pay out a relatively high % of its earnings in dividend payments to shareholders.

The first typre of company is what Peter Lynch would refer to as Fast grower (eg. The Reject Shop, Computershare, JB HIFI etc) whereas the second type of Company is what he would refer to as Sluggard or Slow Grower (e.g. Telstra (in more recent years))

In between the extremes is would Lynch refers to as Stalwarts or medium growers (eg. big 4 banks, Westfield etc).

Each company category can be over/under priced and a good and bad investment depending on price.


Cheers

Jase
 
Brenda Irwin said:
I got my first ever dividend in my account yesterday. On the one hand its terrific I get money paid for doing nothing except holding shares; on the other hand I'm 44 yrs old and it's my first ever dividend. Here's hoping its the first of many such dividends. :)
Click to expand...
Well done,and it will be only the start I remember the first dividend from
the CBA in the early 1990's and what i did from the start was to reinvest
the div back into CBA ,with the magic of compound interest and my
simple maths skills that holding doubles every five years just something
to think about,if you dont need the money just reninvest the div back
into the company.:) I call it sit down money good luck..willar..
 
Franked dividends with dividend reinvestment plans. I LOVE those. Tax perks AND cheap reinvestment (sometimes). As usual it's the compounding factor. After 5 or 10 years or whatever, it really kicks in.
Alex
 
Thanks for those answers.


The fella (cousin) I have recently been following share trading activities with and staying in touch via Skype for some chat explained that:

"I qualified for ANZ dividend of .62c (1,000 x .62 = $620.00) & today WBC dividend .63c (1,000 x .63c = $630.00) cheques are in the mail next week".

He's currently hold MBL not sure if they are in the race to be the first Australian Share to reach $100.00 but they could be a contender since they rose to 94 point something this morning.
 
Rio got to $99.69 a few weeks ago! Looks out of the running now though.

Don't forget that Poseidon went to $250 of there abouts nearly 40 years ago. Then ended up worthless.

See ya's.
 
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