Buying a share means becoming a part owner: When you buy shares, you gain ownership and potential profits through capital appreciation or dividends.
When you invest in shares of a company, you are buying a small piece of ownership in that business. This is a fundamental concept that can transform the way you view investing. When you purchase a share, you are becoming a part owner of the company, and this is the primary reason why companies issue shares in the first place. The benefits of being a shareholder include having a say in the company's decisions through voting rights and potentially earning profits through capital appreciation or dividends. By understanding this connection between ownership and investment, you can gain a deeper appreciation for the stock market and the potential for long-term financial growth.
Owning Stocks and Receiving Dividends: When investing in stocks, you receive a portion of a company's profits as dividends, which are cash payments made to shareholders.
When you invest in stocks by buying shares of a company, you become an owner and are entitled to a portion of the company's profits and assets. However, you can't directly claim your share of profits from the company's CEO. Instead, companies may distribute a portion of their profits to shareholders in the form of dividends. Dividends are cash payments made by companies to their shareholders, usually on a per-share basis. For example, if a company pays a dividend of 24¢ per share and you own 100 shares, you would receive $24 in cash. Companies pay dividends at varying frequencies, from quarterly to annually or not at all. Shares have value because they represent ownership in a company and the potential for future profits, including dividends. Companies' profits and stock prices can fluctuate for various reasons, making investing in stocks an uncertain but potentially rewarding venture.
Understanding Dividend Yields: Dividend yields indicate return on investment from dividends, calculated by annual dividend per share divided by current share price. Historical and forward yields help assess potential investments.
Dividends play a significant role in giving value to shares of a company. The dividend yield is a metric used to express the return on investment from dividends, calculated by dividing a company's annual dividend per share by its current share price. A higher dividend yield indicates a greater return on investment. It's important to understand both a company's historical dividend yield and its forward dividend yield, which is based on estimated dividends in the next 12 months. Keep in mind that dividend yields are calculated using the annual dividend, so if a company pays dividends quarterly, you'll need to calculate the annual dividend by adding up the dividends paid over the past four quarters. Tools like Yahoo Finance can help you easily find this information. Understanding dividend yields can help investors make informed decisions about potential investments and assess the risks and potential returns associated with owning shares of a company.
Dividends add value to shares: Dividends contribute to potential returns, with Tesco's 11p predicted dividend yielding 4.06% at its current share price, making shares an attractive investment. Regular dividends also help prevent significant price drops.
Dividends play a significant role in adding value to shares. For instance, Tesco, a supermarket chain, pays an annual dividend, making it easier for investors to calculate potential returns. In 2023, Tesco paid 10.9p per share, and analysts predict 11p or even 15p per share in the upcoming year. However, it was revealed that Tesco and other retailers like Sainsbury's may have inflated prices for their loyalty card members, offering seemingly discounted prices but ultimately returning them to normal prices. Despite this, investors still sign up for loyalty schemes due to the perceived savings. When a company like Tesco pays a dividend, it adds value to its shares. For example, if Tesco pays an 11p dividend in the upcoming year and its current share price is 271p, the forward dividend yield would be 4.06%. This means investors could potentially make a 4.06% profit from the dividends, making shares an attractive investment. The stability and regularity of dividends also help prevent significant drops in share prices, as investors believe in the company's ability to pay dividends. Overall, dividends are a crucial way investors can make money in the stock market.
Dividends and Stock Prices: A dividend can potentially stabilize a stock's price, but its sustainability depends on the company's financial health and profitability. Growing revenue and profitability may lead to a growing dividend and stock price, while financial struggles could result in a reduced dividend and decreased stock value.
While a dividend can help stabilize a stock's price, it doesn't guarantee that the stock won't lose value. The sustainability of a dividend depends on the company's financial health and ability to generate profits. If a company's revenue and profitability are growing, its dividend is likely to grow as well, potentially boosting the stock price. However, if a company is struggling financially, there's a risk that it may need to reduce its dividend, which could lead to a decrease in stock price. It's essential to consider a company's financial situation and future prospects when evaluating its dividend and stock potential. Additionally, high dividend yields can be attractive, but they may also indicate financial instability, so it's crucial to do thorough research before making investment decisions.
Understanding Capital Gains in the Stock Market: Investors can earn profits through capital gains by selling shares at a higher price than purchase price. Share prices depend on market expectations of future profits, and uncertain future profits can lead to price volatility.
Investors can make a profit in the stock market not only through dividends but also through capital gains. Capital gains refer to the profit made when selling shares for a higher price than the purchase price. Share prices are driven by the market's expectations of a company's future profits and cash flows. When the market believes a company will make more profits, share prices rise, and investors can sell their shares for a capital gain. Conversely, if the market expects lower profits, share prices fall, and investors may face a yield trap, where a high dividend yield might not be sustainable and could be cut. Companies like Tesco and Vodafone, with high dividend yields, could be risky investments if their future profits are uncertain. Share prices do not always perfectly reflect future profits, making investing in the stock market an uncertain but potentially rewarding endeavor.
Impact of Market Perception on Share Prices: Meta's Turnaround: Investors can profit from capital gains by buying shares of companies with promising futures, even when faced with challenges. Meta's recovery from steep losses demonstrates this potential, but also underscores the unpredictability and importance of staying informed.
The market's perception of a company's profitability and future prospects can significantly impact its share price. Using Meta as an example, the company faced numerous challenges in late 2022, leading to a steep decline in its share price. However, by focusing on profitability and overcoming competition, Meta was able to turn its fortunes around, resulting in a remarkable 240% increase in share price since those lows. This illustrates how investors can benefit from capital gains, which is the profit made when share prices rise. It also highlights the unpredictability of investing in stocks and the importance of staying informed about a company's financial situation and market conditions.
Profit from company growth and innovation through investing: Investing in stocks or funds lets you profit from company growth, with compounding returns increasing your earnings over time, but comes with risks.
Investing in stocks or funds allows you to profit from the growth and innovation of companies. The value of a fund, like the Vanguard FTSE All World ETF, rises when the stocks within it increase in value. This concept of compounding returns, where your returns earn more returns over time, is a significant benefit of investing. However, it's important to remember that investing comes with risks, such as dividends getting cut or share prices decreasing. Despite the uncertainty, the historical trend of economic growth and companies' ability to innovate and drive profits suggests a positive outlook for investors. For those interested in learning more about investing, consider checking out the A to Z Investing Course, designed to help beginners become confident investors in just six weeks.
Understanding the real value of companies: Investing isn't just about numbers or share prices, it's about the growth and success of the businesses behind them. Encourage others to join the stock market by explaining the real-world value that causes prices to rise.
Investing is not just about gambling on numbers or share prices; it's about understanding the underlying value of a company. The profits for investors come from the growth and success of the businesses they invest in. This podcast aimed to help listeners see beyond the numbers and appreciate the real-world value that causes share prices to rise. We hope this understanding will help you explain the benefits of investing to others and encourage them to join the stock market. If you found this episode helpful, please share it on social media and give us a positive review to help us reach a wider audience. Remember, our sponsor Trading 212 offers a free share worth up to £100 with a referral link in the description. Happy investing!
24. How To Make Money Through Investing: Dividends, Share Prices, And Why The Stock Market Goes Up
Recent Episodes from The Stocks and Savings Podcast
72. Is This The Easiest Way To Boost Your Savings And Investments? Your Guide To Lifetime ISAs
Are Lifetime ISAs a hidden gem, or just another overly confusing account in the UK?
Let's find out!
If you enjoyed this episode, please leave us a 5 ⭐️ rating & a review. As a smaller podcast, it would really help us to reach more people.
Thank you!😇
---
Get A Free Share When You Sign Up To Trading 212
We'd also like to thank this season's sponsor, Trading 212.
Trading 212 is an investing platform which aims to democratise investing, and it's also the platform that we have used since we started!
Click here for a free share worth up to £100 when you sign up and deposit at least the minimum amount required for Invest or Stocks ISA accounts (which at the time of recording is £1).
If it's not done automatically, you can also go to the main menu, then to 'Use promo code' and copy-paste this code SNSBONUS.
Terms & conditions apply. Capital at Risk. Investments may rise and fall.
---
For more financial education made simple:
- Learn more about our Investing Course
- Download our free investing guide
- Check out our newsletter
- Follow us on Instagram
- Follow us on TikTok
- Follow us on YouTube
- Follow us on Twitter
See you next time! 🤗
71. Is Now The Right Time To Buy NVIDIA Stock?
NVIDIA has been the talk of the investing town for the past couple of years, but could buying shares today turn out to be a great investment?
That's exactly what we'll be trying to figure out!
If you enjoyed this episode, please leave us a 5 ⭐️ rating & a review. As a smaller podcast, it would really help us to reach more people.
Thank you!😇
---
Get A Free Share When You Sign Up To Trading 212
We'd also like to thank this season's sponsor, Trading 212.
Trading 212 is an investing platform which aims to democratise investing, and it's also the platform that we have used since we started!
Click here for a free share worth up to £100 when you sign up and deposit at least the minimum amount required for Invest or Stocks ISA accounts (which at the time of recording is £1).
If it's not done automatically, you can also go to the main menu, then to 'Use promo code' and copy-paste this code SNSBONUS.
Terms & conditions apply. Capital at Risk. Investments may rise and fall.
---
For more financial education made simple:
- Learn more about our Investing Course
- Download our free investing guide
- Check out our newsletter
- Follow us on Instagram
- Follow us on TikTok
- Follow us on YouTube
- Follow us on Twitter
See you next time! 🤗
70. Inheritance Tax - How Does The Most Hated Tax In The UK Actually Work?
It's the most hated tax in the UK, so we thought we'd spend this money mini explaining exactly how inheritance tax works.
If you enjoyed this episode, please leave us a 5 ⭐️ rating & a review. As a smaller podcast, it would really help us to reach more people.
Thank you!😇
(PS we accidentally released this a day early... oopsies)
---
Get A Free Share When You Sign Up To Trading 212
We'd also like to thank this season's sponsor, Trading 212.
Trading 212 is an investing platform which aims to democratise investing, and it's also the platform that we have used since we started!
Click here for a free share worth up to £100 when you sign up and deposit at least the minimum amount required for Invest or Stocks ISA accounts (which at the time of recording is £1).
If it's not done automatically, you can also go to the main menu, then to 'Use promo code' and copy-paste this code SNSBONUS.
Terms & conditions apply. Capital at Risk. Investments may rise and fall.
---
For more financial education made simple:
- Learn more about our Investing Course
- Download our free investing guide
- Check out our newsletter
- Follow us on Instagram
- Follow us on TikTok
- Follow us on YouTube
- Follow us on Twitter
See you next time! 🤗
69. Welcoming Two New Investments To Our Portfolios! The Stocks And Funds We Invested In When We Got Paid
It was a busy month for our portfolios, as we welcoming two new investments to our podcast, and said farewell to an older one...
Also, if you're ready to take the next step on your investing journey, we're here to help!
Check out our website to find out more about the Stocks And Savings Investing Course, a step-by-step roadmap designed to take you from beginner to confident investor in just 6 weeks 👉 www.stocksandsavings.com
Signups close this weekend!🚨
---
Get A Free Share When You Sign Up To Trading 212
We'd also like to thank this season's sponsor, Trading 212.
Trading 212 is an investing platform which aims to democratise investing, and it's also the platform that we have used since we started!
Click here for a free share worth up to £100 when you sign up and deposit at least the minimum amount required for Invest or Stocks ISA accounts (which at the time of recording is £1).
If it's not done automatically, you can also go to the main menu, then to 'Use promo code' and copy-paste this code SNSBONUS.
Terms & conditions apply. Capital at Risk. Investments may rise and fall.
---
For more financial education made simple:
- Learn more about our Investing Course
- Download our free investing guide
- Check out our newsletter
- Follow us on Instagram
- Follow us on TikTok
- Follow us on YouTube
- Follow us on Twitter
See you next time! 🤗
68. How Would We Invest £100,000? PLUS Our 9 Favourite Stocks Right Now
We'll go through the thought process when investing any amount, whether that's £1 or £100,000.
Plus we'll chat about the 9 individual stocks that we'd choose to invest in!
If you enjoyed this episode, please leave us a 5 ⭐️ rating & a review. As a smaller podcast, it would really help us to reach more people.
Thank you!😇
(PS we accidentally released this a day early... oopsies)
---
Get A Free Share When You Sign Up To Trading 212
We'd also like to thank this season's sponsor, Trading 212.
Trading 212 is an investing platform which aims to democratise investing, and it's also the platform that we have used since we started!
Click here for a free share worth up to £100 when you sign up and deposit at least the minimum amount required for Invest or Stocks ISA accounts (which at the time of recording is £1).
If it's not done automatically, you can also go to the main menu, then to 'Use promo code' and copy-paste this code SNSBONUS.
Terms & conditions apply. Capital at Risk. Investments may rise and fall.
---
For more financial education made simple:
- Learn more about our A-Z Investing Course
- Download our free investing guide
- Check out our newsletter
- Follow us on Instagram
- Follow us on TikTok
- Follow us on YouTube
- Follow us on Twitter
See you next time! 🤗
67. Why Did The Stock Market Crash? Our Plan To Deal With Falling Investments.
July wasn't a particularly fun month for investors, and August didn't get off to a great start either...
So, what caused this sudden drop in the stock market, what are we doing about it, and what might the future hold?
Let's find out!
If you enjoyed this episode, please leave us a 5 ⭐️ rating & a review. As a smaller podcast, it would really help us to reach more people.
Thank you!😇
---
Get A Free Share When You Sign Up To Trading 212
We'd also like to thank this season's sponsor, Trading 212.
Trading 212 is an investing platform which aims to democratise investing, and it's also the platform that we have used since we started!
Click here for a free share worth up to £100 when you sign up and deposit at least the minimum amount required for Invest or Stocks ISA accounts (which at the time of recording is £1).
If it's not done automatically, you can also go to the main menu, then to 'Use promo code' and copy-paste this code SNSBONUS.
Terms & conditions apply. Capital at Risk. Investments may rise and fall.
---
For more financial education made simple:
- Learn more about our A-Z Investing Course
- Download our free investing guide
- Check out our newsletter
- Follow us on Instagram
- Follow us on TikTok
- Follow us on YouTube
- Follow us on Twitter
See you next time! 🤗
66. A Stocks And Shares ISA Or A Pension / SIPP - Which Is The Best Investment Account For You?
There's a few different types of investment accounts here in the UK, so which one is best for your money?
Let's find out!
If you enjoyed this episode, please leave us a 5 ⭐️ rating & a review. As a smaller podcast, it would really help us to reach more people.
Thank you!😇
---
Get A Free Share When You Sign Up To Trading 212
We'd also like to thank this season's sponsor, Trading 212.
Trading 212 is an investing platform which aims to democratise investing, and it's also the platform that we have used since we started!
Click here for a free share worth up to £100 when you sign up and deposit at least the minimum amount required for Invest or Stocks ISA accounts (which at the time of recording is £1).
If it's not done automatically, you can also go to the main menu, then to 'Use promo code' and copy-paste this code SNSBONUS.
Terms & conditions apply. Capital at Risk. Investments may rise and fall.
---
For more financial education made simple:
- Learn more about our A-Z Investing Course
- Download our free investing guide
- Check out our newsletter
- Follow us on Instagram
- Follow us on TikTok
- Follow us on YouTube
- Follow us on Twitter
See you next time! 🤗
65. What Did We Invest In This Month? The Stocks And Funds We Invested In When We Got Paid In August
It's payday once again, and you know what that means - it's time to put some money into our Stocks and Shares ISAs, and make some investments.
If you enjoyed this episode, please leave us a 5 ⭐️ rating & a review. As a smaller podcast, it would really help us to reach more people.
Thank you!😇
---
Get A Free Share When You Sign Up To Trading 212
We'd also like to thank this season's sponsor, Trading 212.
Trading 212 is an investing platform which aims to democratise investing, and it's also the platform that we have used since we started!
Click here for a free share worth up to £100 when you sign up and deposit at least the minimum amount required for Invest or Stocks ISA accounts (which at the time of recording is £1).
If it's not done automatically, you can also go to the main menu, then to 'Use promo code' and copy-paste this code SNSBONUS.
Terms & conditions apply. Capital at Risk. Investments may rise and fall.
---
For more financial education made simple:
- Learn more about our A-Z Investing Course
- Download our free investing guide
- Check out our newsletter
- Follow us on Instagram
- Follow us on TikTok
- Follow us on YouTube
- Follow us on Twitter
See you next time! 🤗
64. Our Biggest Investment Just Broke The Internet: What We're Doing About CrowdStrike
What do you do when your biggest investment brings the world to a standstill?
This is a question that - sadly - we had to answer on Friday, as CrowdStrike caused a massive software outage across the globe.
So in this episode, we'll go through what happened, what we did, why we did it, and what we think the future holds.
If you enjoyed this episode, please leave us a 5 ⭐️ rating & a review. As a smaller podcast, it would really help us to reach more people.
Thank you!😇
---
Get A Free Share When You Sign Up To Trading 212
We'd also like to thank this season's sponsor, Trading 212.
Trading 212 is an investing platform which aims to democratise investing, and it's also the platform that we have used since we started!
Click here for a free share worth up to £100 when you sign up and deposit at least the minimum amount required for Invest or Stocks ISA accounts (which at the time of recording is £1).
If it's not done automatically, you can also go to the main menu, then to 'Use promo code' and copy-paste this code SNSBONUS.
Terms & conditions apply. Capital at Risk. Investments may rise and fall.
---
For more financial education made simple:
- Learn more about our A-Z Investing Course
- Download our free investing guide
- Check out our newsletter
- Follow us on Instagram
- Follow us on TikTok
- Follow us on YouTube
- Follow us on Twitter
See you next time! 🤗
63. Seven Investing Lessons We Wish We Knew Earlier To Improve Our Mindset
The number one reason why you'll succeed in investing has very little to do with being able to pick winning stocks or time the market to perfection.
In our view, the key to successful long-term investing is your mindset.
In this episode, we'll be talking through an analogy that we saw earlier in the week about how you should think like a farmer when investing:
- Don't shout at the crops
- Don't blame the crop for not growing fast enough
- Don't uproot crops before they've had a chance to grow
- Choose the best plants for the soil
- Irrigate and fertilise
- Remove weeks
- Remember you will have good season and bad seasons - you can't control the weather, only be prepared for it
If you enjoyed this episode, please leave us a 5 ⭐️ rating & a review. As a smaller podcast, it would really help us to reach more people.
Thank you!😇
---
Get A Free Share When You Sign Up To Trading 212
We'd also like to thank this season's sponsor, Trading 212.
Trading 212 is an investing platform which aims to democratise investing, and it's also the platform that we have used since we started!
Click here for a free share worth up to £100 when you sign up and deposit at least the minimum amount required for Invest or Stocks ISA accounts (which at the time of recording is £1).
If it's not done automatically, you can also go to the main menu, then to 'Use promo code' and copy-paste this code SNSBONUS.
Terms & conditions apply. Capital at Risk. Investments may rise and fall.
---
For more financial education made simple:
- Learn more about our A-Z Investing Course
- Download our free investing guide
- Check out our newsletter
- Follow us on Instagram
- Follow us on TikTok
- Follow us on YouTube
- Follow us on Twitter
See you next time! 🤗
Related Episodes
Your Questions Answered + Real Estate Update For Canadians
Today we’re going to try something a little different in that I’m going to split today’s episode into two sections, covering two different subjects:
First, we’re going to cover some questions that I’ve received from listeners of the show and from students of my investing course, so that you can benefit from the strategies and tactics too. These are specifically going to be in the area of investing.
Next, we’re going to bring on my guest who is our resident mortgage and real estate expert and best-selling author, Sean Cooper. Sean will explain the real estate situation here in Canada so that you can stay informed on how real estate has been affected in these COVID times, whether you’re an existing home-owner that is concerned about the value of their home dropping due to COVID, or whether you are a renter looking to potentially buy in the future.
We cover questions like What should you know? And how can you maximize your chances of getting approved for a mortgage?
And whether you’re an existing or future home-owner, there have actually been some mortgage rule changes that recently took place here in Canada so you definitely want to be informed about those so that you can easily renew that mortgage when it’s time. Or, if you’re looking to buy, so that you can have a smooth stress-free process in obtaining financing for your property, instead of struggling and potentially missing out on your dream home due to financing issues, due to these new mortgage rules that recently got put into place.
A Big Thanks To This Episode's Sponsor:
RBC's Small Business Navigator Hub: For practical resources, advice, and offers, visit RBC's Small Business Navigator hub at buildwealthcanada.ca/hub.
Business is anything but usual these days, and entrepreneurs are looking for support that goes beyond traditional banking to successfully re-open and manage their business. Now, they can access all of RBC’s practical tips, insights, money-saving offers and solutions to support their eCommerce, digital payments, payroll management, employee wellness needs and more – all in one place.
To learn more, check out the RBC Small Business Navigator hub, available online at BuildWealthCanada.ca/hub.
Resources:
- Get your mortgage questions answered for free by booking a meeting with Sean here.
- Get the real estate expense tool for free when it's released by signing up to the waiting list here.
Topics/Questions Covered:
Investing Topics:
- Buying near all-time stock market highs. Should you do it?
- Investing larger amounts of money: Buying-in all at once vs dollar-cost-averaging in.
- How much to focus on dividends in your investing.
- Socially responsible investing, and what to keep in mind before diving in.
Real Estate and Mortgage Questions:
- Let’s talk about COVID and the real estate market. Are we seeing increases in home values?
- How are things if you're looking to buy vs sell?
- Is it a buyer's or seller's market?
- There have been some Mortgage Rule Changes recently here in Canada. Can you take us through them?
- What can we do that is within our control, to maximize the chances of getting approved for a mortgage, and getting the best terms and rate?
- With these record low interest rates that we’ve been seeing, many Canadians that are currently in a fixed-rate mortgage are wondering, is it worth breaking their existing mortgage, paying the cancelling fees, and then getting a new mortgage at the lower rate. Can you talk about the analysis that we should be doing to actually mathematically figure this out?
- What should we consider if we’re shopping around for a home right now, in Canada?
Don’t miss future episodes, giveaways, and free in-depth guides by signing up for free to the Build Wealth Canada Newsletter.
ENCORE: Where Can I Invest and Find High Rates?
Learn where to invest and find high rates.
It’s listener question Friday!
Dear Linda,
I love your podcasts! They are simply fabulous! I am wondering where can I get some financial products with a high rate of compounding? Let’s say 8 to 10%. I need your great help for that, Linda. Thank you very much.
Best regards, Marie
I wish 8 to 10% was so easy!
Be careful when reaching for yield.
A friend of mine was pitched 5.5% junk bonds that weren’t diversified and were 30 year bonds! He was actually considering them because a “friend” recommended them.
High yields equal high risk.
Bank yields are paying maybe 1% to 2%. Ten year bonds are 1.5%. How can you get 5.5? Lower the quality - but you don’t want to do that.
Consider alternative investments - but they can be complex.
Dividends on stocks - but it entails risk to principal.
There’s no easy answer for a “guaranteed” rate.
But here’s the question: should you be investing for growth instead of income anyway?
Growth does involve risk, but over the long-term risk is minimized and returns are maximized.
Get started investing to grow your wealth.
I read 3 Testimonials from iTunes. Have you left me one yet?
Please leave a review and subscribe to the podcast!
All episodes are found at http://lindapjones.com/podcasts.
Volatility 2020: What's next for equity markets
How should investors navigate equity markets during this period of coronavirus-induced volatility? Which sectors will be hardest hit? And is this a buying opportunity for long-term investors? Veteran equity portfolio managers Jody Jonsson and Joyce Gordon, whose experience spans multiple market declines, offer their perspective.
For U.S. listeners: To view What’s next for equities? webinar slides, click here [PDF] or copy and paste bit.ly/3rcdefE into your browser.
To view the webinar or attend future webinar events, visit volatility2020.com.
This episode is no longer available for CE credit.
For Canadian listeners (financial advisors only): To view webinar and slides or attend future webinars, register here.
Do you have any suggested topics for Capital Ideas? Please contact our editorial team at capitalideas@capgroup.com.
The Capital Ideas website is not intended for use outside the U.S. In Canada, please visit capitalgroup.com/ca for Capital Group insights.
MarketFoolery: 06.27.2012
Apple wins a legal victory over Samsung. Best Buy considers a buy-out. Our analysts discuss those stories and talk about the future of dividend stocks.
TNT Total Investing Podcast Ep. 73
In This Episode Tariq and Taheer Discuss The Red Hot GTA Real Estate Market
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