Before falling in love with any company, first, I check if the company follow my strategy. Do I want dividends, or do I care about shares growth? Second I have a look at the average yearly returns, and last I see the franking percentage.
Does the stock follow the plan?
If you plan to get dividends, you need to check
- How often the company gives dividends, and you can quickly check the upcoming dividends here.
- While here, look at the consistency of these dividends in the past years; you need to make sure you will get similar earnings as old stockholders.
- Because you are keeping these stocks long term, make sure the stock price will also increase its value.
If you plan to buy low and sell high stock:
- Check the estimated return on investment for the year.
- If fundamentally you believe it will go up because you are on top of the news, go ahead. The price might be ok to go. But if you want to confirm your theories, you can run a quick Technical analysis with your support lines and set your stop line and your target earnings.
Average return on investment
Different third parties make these stats, which could be your bank, Market Index or any indicator of your preference. What I do is that I compare everyone’s opinions and make my own choices.
Besides this information check, how persistent is the company? The stats might say one thing, but an unstable company takes longer for it to be trustworthy. Some third parties will take the risk, but that does not mean that you have to.
“When a stock’s shares are fully franked, the company pays tax on the total dividend. Investors receive 100% of the tax paid on the dividend as franking credits.”
If they pay just 50% they are paying just half of the tax of your stock dividends. Franking is essential because you might see a significant dividend percentage, but later, you will have to pay the entire tax for that dividend. Meaning that you expected a portion of the money but, in reality, is another smaller amount.
As you guys know, I am not an professional but I have invested for a longtime now and I would like everyone to see the world of investments approachable.
Tons of love