Article by: Nipapan Poonsatiansap CFP ^® Independent Finance Planner

 

When talking about the stock market Most investors often think of it as a lucrative business in order to get the fastest profit. That may not be the right strategy for long-term investment. If you want to create sustainable wealth. You have to let money works for you. And one of the strategies to invest money to work for us is to invest in stock dividend

Why invest with stock dividend?

The principle of investing in a stock that investors often forget is investing in stocks is an investment in a business. No matter what business it is. It is a business that operates with managers, employees, customers, products and services. The only hope is that the profits from the business. (It's not just the 3-4 characters you will print in Settrade, just to check stock prices.) What we will get as a return on equity is dividends, if we choose to invest in good business. Highly competitive business will be profitable and continue to grow. That will be able to increase the wealth to the shareholders quite well.

 

In addition, investment in stock dividend can beat inflation. The basic inflation in Thailand's economy is about 3% per year. If we consider that investment in stocks is an investment in the business. When we invest in good business. The business expects growth. On average, the growth rate of a good company is often more than inflation.
It's been a long time since the founding of the Stock Exchange of Thailand. Investing in stocks gives you an average return of 5-10% per year, which can be easily beaten by inflation.

How do we invest in stock dividend?

Stock dividend selection Three major factors are considered to select stock dividend

1. Should have a strong financial position. Be a leader in the business. Have a brand or brand that is remembered by customers. We need to know and understand the business we are investing in. Regularity in dividends This reflects the Company's policy and rigor in paying dividends. It may be based on past dividend payout data. You can find the stock dividend information on the page. "Information summary" on the website of the Stock Exchange of Thailand ( www.set.or.th , www.settrade.com )  Dividend stocks are good but dividend should pay more each year. For example, from the first year's first dividend of 1 baht, second year should be dividend of 1.10 baht, and third year should be dividend of 1.20 baht. If the company can pay more dividends that means the financial health and operations of the company are likely to continue to grow. It will give the capitalist a degree of peace of mind.
2. Do not forget that investment in dividends is a long-term investment to make money work for us. In addition, we often find that after the company pays dividends. The stock price is equal to or greater than the dividend we have. (Dividend payment to shareholders is payout comes from net profit or retained earnings, resulting in a decrease in cash flow.) As a result, if we expect only short-term dividends then just want to buy shares to receive dividends and then sell it. This may cause us losses at stock prices instead.
3. Investing in dividend stocks also risk that must be aware of. The dividends that are now seen are based on past performance and the past did not indicate the future. If investors use only statistical numbers such as dividends in the past then come to invest for the return of dividends. It is unlikely that they will get the expected return. Sometimes when the company wants to use capital to expand business, the company may not be able to pay dividends as much as it already has.
   

So what investors should do is study the business (stock) we want to invest. Assess future profitability trends which is the best signal to say that the company has a chance to pay dividends continuously? And keep track and investigate our investments consistently. If this is done. Your next stock dividend will have a higher chance of success.