Welcome! Here you will learn how to go about purchasing high paying dividend stocks while keeping your transaction costs to a minimum.
Owning stocks is cheap. When you invest directly in a company’s common stock, the only fees you will pay will be the upfront cost of buying the shares. There will also be a fee to sell the shares but hopefully you will never have to if you own the right companies.
There will be none of the ongoing management fees that mutual fund companies love charging you and so no drag on future returns. Your returns will be free to compound and build wealth.
The easiest way to purchase shares is through an online brokerage. There are many to choose from and they charge varying brokerage fees. You should look for a broker with the lowest fees and best customer service because as a long term investor, these will be the most important things to you. Once you've found one, simply open an account, whether registered for retirement or unregistered, transfer money and start buying shares. Click here for our recommended Online Stock Brokers for U.S. and Canadian long term dividend investors.
The key is to let your investment dollars accumulate until the initial transaction cost makes up a small percentage of your purchase. Our rule of thumb is to keep the initial transaction cost to around 0.5% of the total purchase. Never more than 1%!
So for example...
Say you have $1000 to invest. After doing your homework, you find that XYZ Financial is a good fit for your portfolio. They have a long history of paying out and increasing dividends to their shareholders, they have a clean balance sheet and good management.
XYZ’s current market price is $48.50 a share. Your discount online broker charges a fee of 1 cent per share with a minimum fee of $4.95 and a maximum of $9.95.
So you can buy...
$1000 - $4.95 = $995.05
$995.05/$48.50 = 20 shares
These 20 shares amount to $970.00 and so the fee would make up...
$4.95/$970 = 0.51% of the total purchase
Not bad considering there will be no ongoing fees after you buy the shares!
So the name of the game is to keep transaction costs down. Good job! You now know how to purchase high paying dividend stocks. Now it’s time to learn how to get them for the right price!
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