(photo: New Jordans 2015)
Free Air Jordans huh? I know you’re like, “These dude must be crazy,” or “those Jordans must be fake.” Well, I'm not crazy and the shoes are very real. So how do you get your pair?
Dividends. Dividends. Dividends.
Dividends are a payout of money from a company to its shareholders (people that own stock in the company). They are normally referred to on a “per share” basis such as $1 per share or $6 per share based on a company’s yearly net income. They are then usually split into quarters and paid out to shareholders every three months. Dividends may also be paid out through ETFs and index funds; and even mutual funds in the form of distributions.
What does that mean? That means that every three months, you will get a check or money electronically debited to your brokerage account based on the number of shares you own and you may spend it how you please. Many investors enroll in a Dividend Reinvestment Plan (DRIP) where the money is automatically reinvested into that company resulting in more shares owned by those investors. We’ll discuss DRIP at a later date.
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On the flip the side, if you don’t want to reinvest you can use that money on anything you feel like. You can help pay bills, add it to your savings, or go shopping. So now that you’re in the mall with your dividend cash, it’s time to buy your pair of Air Jordans from money you got for FREE!
Let’s say you invest some money in a stock that has a dividend of $3 per share per year and you own 100 shares. Every three months you will earn $0.75 per share in the form of a dividend. Well since you own 100 shares, that $0.75 is now $75. With four dividend payouts per year, you’ve now earned $300 by way of dividends and all you did was invest in that particular company.
Well, now it’s Christmas time and those Air Jordan XI’s are looking real nice and would look even better on your feet. No need to worry where the money will come from, because you kept that $300 from dividends specifically to purchase them.
So here’s our equation:
INVESTING + DIVIDENDS = FREE AIR JORDANS!
Companies offer dividends to entice investors and show appreciation for investing in their company. Not only can you earn money with progression of a company’s stock, but you can also earn steady income by way of dividends.
Investor Takeaway: Turn your consumer mentality into investor psychology. Invest in what you know.