Dividend income is very useful. It can be used to pay for food, your hobby, your kids’ education or hobby, a wonderful vacation, a new car, rent or mortgage payments.
Common stock dividends aren’t made equal. Dividends paid from cyclical stocks like oil and gas producers or gold/copper miners are volatile. When the underlying commodity prices rise, they will increase their dividends. Similarly, when the underlying commodities drop in price, they will likely cut their dividends.
There are some energy or gold stocks, such as Enbridge (TSX:ENB)(NYSE:ENB) and Franco-Nevada (TSX:FNV)(NYSE:FNV), which provide more trustworthy dividends.
Personally, regardless of the dividend yield, I would only determine an investment acceptable if it provides satisfactory expected returns for the risk I’m taking. Oftentimes, it boils down to buying stocks at a margin of safety.
All that being said, I love receiving dividends.
The joy of receiving dividends
One of my most enjoyable activities is receiving dividends. Thankfully, I don’t need to manually calculate how much I receive from dividends. My bank keeps track of that. I simply download the data and use the SUM() function in my spreadsheet program to, well, sum up the dividends I receive every month.
Come to think of it, September is one of my favourite months for dividend collection. In fact, so are March, June, and December. In these months, I receive the biggest amount of dividends!Read More