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Many people want to invest in the stock market as a means of providing a steady income. If your purpose for investing in stocks is to create income, you need to choose stocks that pay dividends.
Income Producing Investments Basics
Many company will pay annual dividend and dividend is a important source of returns. Don’t confuse dividends with interest. Most people are familiar with interest, because that’s how you grow your money over the years in the bank. The important difference is that interest is paid to creditors, and dividends are paid to owners (meaning shareholders — and if you own stock, you’re a shareholder, because stocks represent shares in a publicly traded company).
When you buy stock, you buy a piece of that company. When you put money in a bank (or when you buy bonds), you basically loan your money. You become a creditor, and the bank or bond issuer is the debtor, and as such, it must eventually pay your money back to you with interest.
Income Producing Investment Strategy
Investing for income means that you have to consider your investment’s yield. If you want income from a stock investment, you must compare the yield from that particular stock with alternatives. Looking at the yield is a way to compare the income you expect to receive from one investment with the expected income from others.
Investment Yield enables you to compare how much income you would get for a prospective investment compared with the income you would get from other investments. |
income producing investments