Account Info
Log Out
No matches yet
Operations too frequent. Please try again later.
Please check network settings and try again Refresh Refresh
History record delete
    Quotes All >
      News All >
        Log in to access Online Inquiry

        Dividend Stocks: How to Invest in Them

        Views 93742022.09.21

        Dividend stocks: a haven amid market volatility

        Key takeaways

        • A Dividend is a portion of profits given back to the shareholders that can help increase investor loyalty, boost the stock price, and make good use of extra cash for the company.

        • Dividend Yield = Annual Dividends Per Share / Stock Price Per Share * 100%

        • Stocks with a strong dividend payout history are usually from mature companies with stable earnings and can act as a hedge against stock market volatility.

        Understanding dividend yield

        Companies normally distribute a portion of their profits as dividends while retaining the remaining amount to reinvest in the business. 

        The dividends may be paid in cash or additional shares of stock. Most dividends are paid quarterly, some are paid monthly, annually, or even in the form of a special dividend. 

        Dividends can bring many benefits, such as increasing investor loyalty, boosting the stock price, and making good use of extra cash for the company.

        The dividend yield is the financial ratio that measures the amount of cash dividends paid to shareholders relative to the stock price per share. 

        It's calculated by dividing the annual dividend paid per share by the stock price per share.

        Dividend Yield

        = Annual Dividend Per Share / Stock Price Per Share * 100%

        = Earnings Per Share * Dividend Payout Ratio / Stock Price Per Share * 100%

        = (1/PE Ratio) * Dividend Payout Ratio * 100%

        From the equation, we can tell that dividend yield is positively related to the dividend payout ratio and negatively related to the PE ratio.

        Therefore, the high-yield dividend stocks usually refer to those with high dividend payout ratios and low PE ratios.

        However, investors should be aware of extremely high dividend yields, as they may result from an unreasonably low PE ratio or unsustainable dividend policy.

        The rationales behind investing in dividend stocks

        The main purpose of a high dividend yield portfolio is not to outperform the broad market but to generate a passive income stream. 

        In general, stocks with a strong dividend payout history are from mature companies with stable earnings, which are less susceptible to large swings in the market. They may act as a hedge against economic or political uncertainty and stock market volatility.

        However, generally not all dividend stocks are great investment choices. When considering dividend stocks, also consider other parameters are included, such as a sustainable business model, a long track of profitability, rising cash flows, good liquidity, or a strong balance sheet. 

        Trade like a pro with moomoo

        Start your professional trading today

        Terms and conditions apply right-arrow

        This presentation is for informational and educational use only and is not a recommendation or endorsement of any particular investment or investment strategy. Investment information provided in this content is general in nature, strictly for illustrative purposes, and may not be appropriate for all investors. It is provided without respect to individual investors’ financial sophistication, financial situation, investment objectives, investing time horizon, or risk tolerance. You should consider the appropriateness of this information having regard to your relevant personal circumstances before making any investment decisions. Past investment performance does not indicate or guarantee future success. Returns will vary, and all investments carry risks, including loss of principal. Moomoo makes no representation or warranty as to its adequacy, completeness, accuracy or timeliness for any particular purpose of the above content.

        Moomoo is a financial information and trading app offered by Moomoo Technologies Inc.

        In the U.S., investment products and services available through the moomoo app are offered by Moomoo Financial Inc., a broker-dealer registered with the U.S. Securities and Exchange Commission (SEC) and a member of Financial Industry Regulatory Authority (FINRA)/Securities Investor Protection Corporation (SIPC).

        In Singapore, investment products and services available through the moomoo app are offered through Moomoo Financial Singapore Pte. Ltd. regulated by the Monetary Authority of Singapore (MAS). Moomoo Financial Singapore Pte. Ltd. is a Capital Markets Services Licence (License No. CMS101000) holder with the Exempt Financial Adviser Status. This advertisement has not been reviewed by the Monetary Authority of Singapore.

        In Australia, financial products and services available through the moomoo app are provided by Futu Securities (Australia) Ltd, an Australian Financial Services Licensee (AFSL No. 224663) regulated by the Australian Securities and Investment Commission (ASIC). Please read and understand our Financial Services Guide, Terms and Conditions, Privacy Policy and other disclosure documents which are available on our websites and Moomoo Technologies Inc., Moomoo Financial Inc., Moomoo Financial Singapore Pte. Ltd. and Futu Securities (Australia) Ltd are affiliated companies.