6 interesting charts every dividend investor should know
Dividend investing is quite fun. But you still need to keep your feet on the ground and follow the numbers, logic and not emotions. But some principles are hard to grasp, so it's better to see them clearly on a chart. And that is why I bring you a few of them!
Reinvestment works wonders
Dividend reinvestment plays a vital role in maximizing long-term returns from stock investing. It allows you to benefit from the principle of compound interest, where newly purchased shares generate an additional dividend for you to reinvest. This triggers the snowball mechanism.
As a result, the overall value of a stock portfolio can grow at an exponential rate, especially if the company increases dividends at a faster rate. Through reinvestment, even a small dividend can dramatically increase the value of the overall investment over decades through leverage. Interest accumulation works best at the beginning of the investment period.
Reinvestment also allows you to maintain your original strategy without…
Great, thanks for the recap. I was familiar with most of the charts, but I saw a few charts for the first time, so thanks for the new information.
I honestly know all of them. Well explained, every dividend investor should know this.
Personally, I would like an accumulation ETF focused on dividend companies. Thanks to the value test, you can collect dividends from such an ETF practically without having to pay taxes on them, as long as they do not exceed 100 000,- per year. What is above 100,000,- you can withdraw tax-free for three years. And as a bonus, you don't even have to declare it on your tax return.
Of course you need to consult your accountant, there are some exceptions, for example the time and value test cannot be combined.
Nice charts and nicely described. I'm not much of a dividend investor yet, rather I'm looking for a growth company. I'm just starting out, I have a portfolio of about 150k CZ and even if I had it concentrated in just a couple of high dividend companies I probably wouldn't get much out of it yet. 🤔 That's why my mindset now is to have 2-3 years of withdrawn living expenses and put as much of my funds from work into investments to make capital. Maybe it's a mistake, and pick maybe one company for dividend main now and just put maybe $100 a month there like in an ETF? What, how about you? 😊