Earning Profits Through Dividend Paying Stocks in New Zealand
Report Prepared by Dividend Investor New Zealand
What are Dividend Paying Stocks? â—?
In Simple Word's You can take this as whenever a company listed in Stock Market earns some profit, it have two options first they can reinvest the profit money back into their business by buying their own shares back, improving the business infrastructure setup, buying some new resources etc. Second they can distribute some money out of their profit to their shareholders and this distributed amount which shareholder receives from the company are known as dividends. A Company can provide you dividend in two forms i.e. it can distribute the dividends in form of cash or it can give you stocks as dividend distribution. However, there are different thoughts on both as some people prefer to get stock as dividend while many rest prefer to get some cash regularly as dividends.
Why People Likes to Get Dividends? When you buy a stock in stock market you expect something to get in return as you have invested your money on the stock. People love to get dividends because of the primary reason that dividends help you to build regular cash flow towards your stock portfolio. Generally if you select a dividend paying stock in New Zealand, you will can get dividends for that stock up-to 4 times in a given financial year because after every quarter mostly companies review their profit and on the basis of profit they distribute the dividends to you. Now Imagine How will You feel if you will be paid 4 times in a year for a particular stock.
While Investing in Dividend Stocks? â—?
As you know there is one condition to get dividend paid from stock listed companies and that is they should earn profits so that they can give some profit to you as dividend in New Zealand so all you need to do is identify some dividend paying stocks which can possibly earn profit in next quarter, half or year.
Identifying the Best Dividend Paying Stocks in New Zealand There are few Key Signals that reflects that how company has been performing in the recent past and how much dividend it has been paying to it's shareholders. We will discuss some important one in below. These are as below; ●
Earning Per Share(EPS)
Dividend Per Share
Dividend Payout Ratio(DPR)
Dividend Growth Rate
Price to Earning to Growth Ratio(PEG)
52 week Hi/Low Data
Why People Likes to Get Dividends? â—?
When you buy a stock in stock market you expect something to get in return as you have invested your money on the stock. People love to get dividends because of the primary reason that dividends help you to build regular cash flow towards your stock portfolio. Generally if you select a dividend paying stock in New Zealand, you will can get dividends for that stock up-to 4 times in a given financial year because after every quarter mostly companies review their profit and on the basis of profit they distribute the dividends to you. Now Imagine How will You feel if you will be paid 4 times in a year for a particular stock.
1. Dividend Yield ●
Dividend Yield is a ratio which dictates how much a company pays out every year relative to it's share price. It is also known as the only return on investment in the absence of capital gain. Calculated As:
Annual Dividend Per Share Dividend Price Per Share
This is a measure which tells you how much “bang for your buck you” can get from dividends. Lets take an example suppose there are two company A and B for which stock price are respectively 20$ and 40$ and both are giving same dividend $1 per share to investor then dividend yield for A and B will be 5 and 2.5 respectively. So in such case it will make sense to invest in company A because it's having high dividend yield and you will be making the same dividend which you will get after investing twice of this in B.
2. P/E & EPS ●
Earnings Per Share is a financial ratio which shows how much earning company is having on each of it's share while P/E basically works like an evaluation of a company's current stock price relative to it's earnings per share. Calculated asP/ E=
Net Income− Dividends on Preffered Stocks Average Outstanding Shares
Market Value Per Share Earning Per Share
Evaluation of EPS and P/E lets you know which stocks are rightly priced and helps you to find Under priced or undervalued dividend paying stocks in New Zealand Market.
3. Dividend Per Share, Payout Ratio, and Growth Rate ●
Dividend Per Share shows the amount that you will be getting as dividend on each of the stock while dividend payout ratio shows how much dividend company is paying to shareholders out of it's earnings. Dividend per share should be as high as possible while DPR always should be less than 100. An ideal DPR ranges between 75 to 90%. Do not consider dividend paying stocks which are giving you payout ratio of more than 100%. Dividend Growth Rate is the annual growth rate by which dividends increase for a particular stock. If a company is performing well in stock market, it's dividend will be highly increasing as it will be making profit and will try to give shareholders each year more and more. Suppose A company is earning 0.3$ on each share and is giving you 0.4$ thus having dividend payout ratio of 133 but there is risk as nobody can give you more than what it is earning at it's own.
4. Dividend History â—?
Dividend History Shows since how long company has been giving dividends to it's shareholders and it's quite desirable while going to buy high Yield New Zealand dividend stocks that we choose stocks which are having long dividend history as a long dividend history simply means company is quite stable and it has given easy dividends to shareholders in past. It adds an extra level of assurance and reliability.
5. Last But, Certainly Not Least â—?
Always check about the company profile, market capitalization and 52 week Hi/Low Data for having an better and more accurate analysis about a high dividend paying stock in New Zealand.
Final Words!! If you will go through the mentioned steps every time while you buy New Zealand Stocks High Dividend, definitely you will be having a good bunch of best dividend paying stocks from NZX. For More information on Dividend data for NewZealand Stocks You can visit us @ nz.dividendinvestor.com
Published on Feb 28, 2014
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