Imagine cricket legends like Sachin Tendulkar and Rahul Dravid. They were not swashbuckling T20 players but masters of the Test match. Similarly, trading (its actually “investing”) for dividend income is not about quick runs; it’s a long game.
- Stock Selection: Look for companies with a consistent dividend-paying record. But don’t just chase high dividend yields. A standard dividend yield is between 1% to 1.5%. Companies with yields much higher than this could be masking other financial issues.
- Quality over Quantity: Invest in companies with strong Roots & Wings, as per the investment philosophy. Roots refer to strong balance sheets, low debt, and high return on equity. Wings symbolize consistent revenue and profit growth.
- Long-term Holding: If you’re in for the dividends, you’re in for the long haul. Warren Buffet aptly said, “Our favorite holding period is forever.”
- Tax Considerations: Dividends are taxable. Hence, factor this into your calculations.
- Reinvest Dividends: Instead of spending the dividends, reinvest them. Compound interest will significantly boost your returns over the years.
To sum up, trading for dividend income is more of a long-term strategy. It’s about patience and making judicious choices. For those who wish to trade for dividends wisely and prefer expert guidance, Jama Wealth’s PMS services and associated SEBI Registered Investment Advisor services are available to guide you.
