Dividend Investing

Stephen H Akin
2 hours ago
2 min read

High Dividend Yields can be Attractive for Investors Seeking Income

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What Is A Good Dividend Yield?

At present the S & P 500 average dividend yield is 1.344 %. In general yields between 2% & 5% should be considered as a good dividend yield. Average dividend yields vary from industry to industry. The higher yield sectors are: Financials, Energy, Materials, Utilities and Consumer Staples. Lower yield sectors include: Information Technology, Communication Services and Consumer Discretionary.

How much does it take make $1,000.00 a month in dividends?

To generate $1,000. per month ($12,000 per year) in dividend income, the amount of stock you need depends on the average dividend yield of your portfolio.

Key Calculation

The formula to estimate the required investment is:

Required Investment=Annual Dividend IncomeDividend YieldRequired Investment=Dividend YieldAnnual Dividend Income

So, for $12,000/year:

At a 4% dividend yield (typical for a diversified dividend stock portfolio), you need to invest $300,000.

How much capital do I need to generate $50,000 in dividends in a year?

If you target a 5% average dividend yield you would need to invest about $1,000,000 to generate $50,000. per year in dividends.

What is the 25% dividend rule?

The "25% dividend rule" refers to a special set of procedures that apply when a company declares a cash or stock

dividend that is equal to or greater than 25% of the value of its stock. This rule primarily affects the timing of the ex-dividend date, which determines who is entitled to receive the dividend.

For regular dividends (less than 25% of the stock's value), the ex-dividend date is typically set one business day before the record date. Investors must purchase the stock before this date to be eligible for the dividend.
When a dividend is 25% or more of the stock's value, the ex-dividend date is not set before the record date. Instead, it is moved to the first business day after the dividend's payment date (also called the payable date).

Are high dividend yields good?

High dividend yields can be attractive for investors seeking income, but they are not always a sign of a good investment. The context behind a high yield is crucial.