Buy your First Dividend Stock
Buy your first dividend stock with these simple steps:
Step 1: Book an appointment with a financial advisor from your bank. Create a brokerage account so that you can start investing in stocks. The financial advisor should also be assessing your risk tolerance and your time horizon.
For example, I started to get comfortable getting into the market by buying mutual funds. After half a year or so, I felt the price of the fund didn’t move much and I would have gained more by buying individual stocks. However, mutual funds and stocks are obviously different. Mutual funds contain a basket of stocks, so you’re much more diversified by buying a mutual fund than buying shares in one stock. In addition, each year, you’re paying fees for the fund management, which eats into your returns. That said, if you’re stock picking, you can pick the best value at the time that fits into your portfolio. New investors may not be as comfortable buying a single stock initially. ETF is similar to a mutual fund, except the management fee is significantly lower. For example, an index ETF follows the price action of an index.
Step 2: Buy a Canadian dividend stock in your non-registered (taxable) account for starters.
As a Canadian, receiving Canadian company dividends in the non-registered account is tax-favorable. That means you pay less tax on it versus if you bought a foreign stock in your non-registered account.
Why Buy a Dividend Stock as your First Stock?
Dividend stocks pay you a dividend periodically. From experience, they are easier to hold onto even in the face of volatile stock prices. Actually, with dividend payers, they could be less volatile because the company’s yield will help put a bottom on the price of the stock. No matter if the price goes up or down, you’ll still get your dividend, as long as you bought shares in a good business.
Companies generally pay dividends annually, every half year, every quarter, or monthly. They’ll stick to one of the above. Most of the time, we see companies paying a dividend every quarter. You can check on the company website to determine which it is; alternatively, you can check out the price graphs on Google Finance.
Dividend Paid Quarterly?
On Google Finance, simply, type in the name of the company you’re looking for.
A drop-down appears as you type.
Click on the company that you’re looking for.
Then, next to “Zoom”, choose the ‘1 yr’ view.
Type “Bank of Nova Scotia”. (Tip: You can also type the ticker “BNS”)
In the dropdown, click on the first one that says “BNS The Bank of Nova Scotia TSE”
Choose the ‘1yr’ view in the graph.
We see that the Bank of Nova Scotia does pay a quarterly dividend, with 4 dividends in a year. Currently, Scotiabank pays $0.60 per share. That means, you get $60 if you owned 100 shares, and the yield is 4.3% for the whole year, which I remember is the interest I got paid for a GIC several years back. However, dividends are more tax-favorable than GIC interests.
If you like what you've just read, consider subscribing via the "Subscribe Here" form at the top right so that you will receive an email notification when I publish a new article.Disclosure: I am long BNS.
Disclaimer: I am not a certified financial advisor. This article is for educational purposes, so consult a financial advisor and or tax professional if necessary before making any investment decisions.
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