Dividend capture – old-fashioned investing gets a face lift

For my parent’s and my grandparent’s generation, investing in the markets meant picking out shares in companies they knew – the telephone companies, electric utilities, that sort of thing. They looked for companies who wouldn’t disappear overnight, and who had a track record of steady growth and good dividend payouts.

While there have been a few surprises, these dividend-paying shares are, almost by definition, low risk. These are the steady-Eddie, slow-moving giants of the investment world.

It was sensible investing back then, and it’s still a very wise choice for portfolios.

What are dividend payments, and how do they make people rich?

Dividends are regular sums of money paid out by companies from their profits to their shareholders.

Paying regular dividend income is traditionally seen as a measure of the long-term strength and success of a company. Historically, dividend-paying companies have outperformed other asset classes over the long term. This makes them one of the safest investments out there.

The idea that you can get paid for holding a stock in your portfolio, while you wait for that share price to rise, is a win-win for investors.

“Money for nothing”, as it’s sometimes described … but old-fashioned dividend investing isn’t for everyone.

First off, buying a bunch of shares in Tesco … or Vodafone … would be tying up our money (and we’re trying to get it working harder for us).

Second, stocks (even good ones) can go down … markets can crash … So putting my money into long-term share ownership leaves me feeling vulnerable.

I want all the benefits of that old-fashioned, steady investment – but I want it in a modern, dynamic format, that cuts risk and makes my money work harder.

Perhaps that sounds like too much to ask for. But a few months back I was shown a trick for taking dividend payments from short-term spread bets.

All the benefits of long-term dividend investing, but my money is only tied up for a couple of days at a time. It’s like drawing a salary without ever having to turn up to work!

I’ll be bringing you more details on this ‘trick’ over the coming weeks, so please – if you thought dividend investing was too ‘old school’ for you – I’m confident you’ll be looking at it in a whole new light!

Related posts:

Dividend capture: how and why it works Unraveling dividend yields