Full disclosure: I don’t know shit about stocks nor dividends.
I was discussing dividends with my brother and I decided to write down what little I’ve learnt with stocks and dividends over these past few months (or years, depending on how you count them).
To begin with, I tried investing in stocks that pay dividends a few years ago. This is Greece, so we didn’t have access to the new apps that are now available. I only had ebanking for Piraeus Bank, which is okay. It’s a sold piece of software with pretty much all the tools you might need. I did my research, found a couple of stocks that I thought would pay out dividends in the upcoming months (In Greece they don’t really announce the exact dates, so I had to guess from the historical data I found on news articles.)
I made an Excel sheet, tracked some Greek stocks, looked up their prices etc, and decided on a few. I don’t even remember which ones, it has been so long. Doesn’t really matter.
Then I applied for stock market access to my bank which they gave to me. They needed a separate account to fund it, so we made one. I added some money into it. I looked at the commission fees, they were purposefully confusing. Something like x percent but a minimum of 5 euro.
Then I bought some stock, paid some insane commissions for it, waited, got the timing right and got the dividends just as I expected, and then paid some more commissions and taxes on the pitiful dividends.
So I decided it wasn’t worth it for the small amounts I was planning to invest and I just left the stocks in my account. I later sold them at some point, they weren’t much to begin with, and paid commissions on that as well.
So I decided to give it another try after the insanity of the Gamestop saga.
I already use Revolut in my daily life so it was just a matter of a few taps to fund my account and send in a buy order. I lost some money, gained some more, and then decided that trading fast wasn’t for me, I’m more of a long-term investor, so I switched to dividends. I found a few dividend stocks that I thought would do well, bought some in Revolut with fractional stocks, and waited for the money to come pouring in.
Once more, I got it right. I bought CVX at a dip at a good price and the stock itself went up. The dividends were nice, a few dollars. And then I paid 30% withholding tax rate on top of that. Revolut allowed 3 free trades per month, and now it’s 1 trade in the basic free account. They changed it after the Gamestock debacle, many users hopped on to invest.
So, even with low fees, it will still eat up your earnings. Dividends is a long game. That stock would pay off in the long-term, but I decided that Bitcoin is a better investment in the end. That’s a discussion for another day.
Okay, so where can I learn about Dividend investing?
I have no clue. What I can tell you is what I’ve found personally useful.
What I have learnt from others and with which I agree with is that it’s pointless to chase after dividends. The stock price gets reduced after the pay date by the exact amount of the dividend, and it makes sense. Let’s say you own a stock that costs 100 euro. And it paid out 3%, which is normal. The stock paid you 3 euro, so the next day the stock market lowers the price of the stock to 97 euro. And it makes sense, because you as an investor, own a paper asset that is worth 97 euro + 3 euro in cash in your investing account ready to either withdraw or reinvest. Also, there’s an artificial pumping of the price as soon as the dividend is announced and for a time leading right up to the pay date. So, if you chase after the dividend and you plan to sell it right after the pay date, you usually earn less. And if you weren’t holding the stock from before and you bought it when the dividend was announced, you paid a bit more to buy it. And on top of that, there’s some law that if you don’t own the stock for like 90 days then you get taxed more. I don’t even know, you have to ask your accountant for that.
I personally think that dividend investing is for long-term hodlers who decide on a stock, do their due-diligence, patiently wait, buy the dip and hodl forever. Or at least for a few years. Trading is a whole different thing and some would say it’s not even in the realm of investing, it’s closer to gambling.
I think that this guy has some solid advice to offer. I like how we can see his portfolio over time. Andrei Jikh’s channel on youtube, and here are all the videos about dividends. Here is the Dividend Investing for Beginners playlist. The first video, “How to Invest for Teenagers,” provides some solid advice that everyone needs to hear as early as possible. And there are some book recommendations as well:
As a tool, I liked Dividendmax. This isn’t sponsored, I have nothing to gain by suggesting them. I just liked how it showed predictions and historical data. There’s a free trial which is more than enough to do your research. The price is quite high for a small investor such as I, so I looked up some reviews. Most people said it wasn’t worth it and that you can find all that data openly. I disagree. I kept looking at some stocks and Dividendmax had awesome historical data and ex-dates all clearly laid out, and I was looking at the same stock inside Degiro on the Dividends section and there was nothing to be found. So it’s not useless, it’s just expensive. I’d rather invest that same subscription money to another stock. I would pay for it if I was investing like 100.000 euro or more and needed to have a proper tool to make decisions with.
Finally, for some reason I really like REITs. I’m not sure why, maybe it’s because I can’t afford to invest in real estate, so fractional ownership sounds appealing to me. Basically REITs are real-estate companies with a somewhat specific focus and target market that buy real estate, sell it, earn rent or whatever, and pay you a percentage of their earnings. They simply use the stock system to earn capital and pay back investors. They pay frequently, either every quarter and some every month. It’s like owning real estate with none of the hassle and all of the benefits. That’s my personal preference and when I can finally afford to pour some money into stocks I’ll pick some REITs to buy.
Again, this is not financial advice. It’s just some stuff I’ve learnt on my own.