Making Money on the Stock Market Using Dividends

An easy long term way to make money on the stock market is to make use of the dividends paid by many companies. When you receive the dividends, you can reinvest them by buying more of the same stock. This has a compounding effect, and along with any capital gain of the stock can build a good valued investment.

The first step is to sign up with a broker if you don't already have one. Then it is a matter of selecting a good dividend paying stock that also provides a dividend reinvestment scheme. With such a scheme, any dividends that you receive will be reinvested in stock on your behalf. Choose a stock whose company is well run and managed, with low debt, and operates in a reliable market. Stocks paying dividends of 5% or higher exist. Consult your broker about selecting a suitable stock. Many online brokers provide additional information about stocks such a dividend yields, frequency of payments, debt levels and other interesting information. There are also a number of advisers who, for a fee, provide recommendations on good dividend paying stocks. Another advantage of dividends is that a number of countries provide tax advantages on dividend payments. For more information consult your local tax authority.