Investing in shares for the sake of dividends

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Posted by on Tuesday August 21, 2012 15:47:54:

When people buy shares, they can get rewarded in 2 ways:
- Dividends
- Capital appreciation

Dividends are those yearly or quarterly payments a shareholder receives in form of cheques when a company shows profit and declares a dividend.

How about if you just wanted to invest in a publicly quoted company just for the sake of the dividends that they pay quarterly, semi-annually or yearly? Well you can do so and this can still help you remain a shareholder of the company even if you are earning sufficient income from their dividend payouts.

How much can I make receiving dividends?
The question should be how much do you really want to make with it? Let's assume you want to be making at least N100,000 a year from just dividends. That means you can seek out a company that pays about N1 per dividend and then buy 100,000 units of its shares or another company that regularly pays about N0.50 per share and then buy about 200,000 shares. So when the time for dividend comes, you are most likely to be paid N100,000 as dividend on your investment when it is declared.

Do you have to pay tax for dividend?
Yes you do or rather you already have since the tax is deducted at source in form of Withholding tax. You no longer need to pay any additional tax if all you get from your stock investment is dividend payment. You may only have to submit a copy in your tax returns as tax already paid and you can use it as a tax credit to offset any other tax liability.

Some companies that recently paid dividends to shareholders

- First bank of Nigeria
- Zenith Bank (Paid almost N0.95 per share in 2011)
- Unilever Nigeria: N1.40 per share in 2012
- GTBank: N0.85 in 2012
- Access Bank: N0.30 in 2011
- WAPCO: N0.75 in 2011

Many more paid but I thin the financial sector are among the highest paying sector for dividends.

Which share do you buy for yearly dividend?
Just do an analysis of the company you want to invest in to see if they have been paying dividends the for the previous years and then buy the one you trust relative to the amount of dividend you want to be earning.

Re: Investing in shares for the sake of dividends Reply by Kingsley on Friday October 11, 2013 at 13:27:51:


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