Being a shareholder can sometimes feel like riding a rollercoaster. You’ve got the highs of stock prices soaring and the stomach-dropping lows when they fall. However, don’t worry, there’s a way to enjoy the thrill and still maximize your profits.
As a shareholder, your primary goal is to see the value of your investment grow. How you get there depends on a combination of savvy investment strategies, smart decisions, and keeping an eye on the right financial indicators.
Ready to turn that shareholder certificate into a cash cow? We’re about to tell you how.
Invest in a Company That Pays Dividends on Time
How long do you really want to wait for your paycheck? Not forever, right? Turns out investors don’t want to wait for their dividends for too long either. If you’re serious about maximizing your profits, invest in companies that have a strong track record of paying dividends and paying them on time.
Dividends are basically your share of the company’s profit, distributed directly to you as a reward for being an investor.
You’ll be amazed to know that even some major S&P 500 companies, like Amazon and Alphabet, have never paid any sort of dividends. They had the money to pay, but they just didn’t want to risk it. After all, paying dividends is a commitment that not every company can make.
Therefore, make sure you find yourself the right company to invest in if you’re looking to earn profits through dividends.
When looking for the right company, make sure to check their dividend payment history. Do they pay regularly? Have they increased their dividend payouts over time?
This shows financial health and the company’s commitment to rewarding shareholders like you. Take the case of Canadian Utilities – a Canada-based utility company.
The Canadian Utilities dividend payment history over the years is what has attracted many investors to this company. That’s because this Canadian company has constantly paid out shareholders, which showcases its long-term stability.
ValueTrend shares that Canadian Utilities has a super-solid record of steadily growing its dividends. After all, when the company is consistent in its dividend payments, it manages to establish itself as a reliable dividend payer. That, in turn, helps that company gain investors like you who fancy receiving their due money on time and regularly.
Keep Your Ear to the Ground for Earnings Reports
If you think earnings reports are just boring company updates, think again. These quarterly insights give you the inside scoop on how the company is performing and whether you should keep or rethink your investment.
When a company reports positive earnings, the stock price usually jumps, and so does your potential profit as a shareholder. But here’s the kicker: it’s not just about good news.
Even when earnings disappoint, staying informed can help you make strategic moves. Maybe the stock price dips temporarily, offering you a chance to buy more shares at a lower price. You can even sell those stocks at a higher value later.
Microsoft and Google presented disappointing earnings reports in July this year, which led to a fall in their stocks. However, these drops are likely temporary, given the overall strong financial track record of these companies.
Diversify Your Portfolio
Do you know what happens when you put all the eggs that you own and have spent your hard-earned money on in one basket? Nothing really, until the basket just decides to break or snap. Then what? Then the unfortunate thing is you lose all your eggs, everything.
The same idea applies to investing.
A company is doing super well in the market right now, and you’re tempted to go all-in on it. Not necessarily a bad idea, but not entirely a risk-free option either. If that company fails, you end up losing big, maybe even losing it all.
Thus comes the need for diversification – putting your eggs in different baskets.
Diversification is one of the few things that can protect you from having to suffer big losses. As you invest in different companies, maybe across different sectors, you reduce the risk of losing your entire investment if one company underperforms.
Now, don’t overdo this diversification though. Spread your investments; it’s important. However, remember that owning too many different stocks can make it hard to keep track of how each one is doing.
What you need is a balanced portfolio, something that allows you to maximize growth while minimizing risks. You wouldn’t want a stock market buffet where you lose track of what’s on your plate.
Keep Emotions in Check During Market Swings
Human emotions can get super wild super fast, especially when they have shares to buy or sell. The market takes a dive – time to sell, hurry. The market starts getting back up – need to quickly buy a few shares to sell later. Or vice-versa, you know.
However, here’s a secret every savvy shareholder knows or should know: patience always pays off in the stock market.
The markets will swing; it’s absolutely normal. However, if you’re looking to maximize your profits, you can’t but keep your emotions in check.
If you see that the market is getting volatile, don’t panic. Just take a step back, review your investment strategy, and remember that the stock market is a long-term game.
Over time, the market has shown consistent upward trends, even after periods of turbulence. Shocking? Well, not really. That’s what share markets do; it’s very natural for them to do so.
Selling your shares in a panic might lead to missed opportunities when the market bounces back. Hence, the next time the market does a sudden dive, hold tight and keep your eyes on your long-term goals.
Maximizing your profits as a shareholder isn’t about luck. It’s about strategy, patience, and making informed decisions. By keeping these suggestions in mind, you’ll be well on your way to growing your wealth. After all, shareholding is an adventure, and if you play your cards right, it can be a profitable one.
