Collecting a loyalty bonus

Wouldn’t it be great to be rewarded by the companies you invest in for just holding their shares? Pick the right stock and you can be.

While investors select certain stocks and wait for them to go up in value before selling them on to make money, there are other companies that are not going to see a surge in their share price but can still be worth buying.

Instead of selling when these stocks rise in value, investors that hold these companies’ stock get regular payments as a thank you for providing them with working capital. These payments are called dividends and are usually paid annually or sometimes more frequently. These dividends are taken out of the profits a company has made over the year after all its costs have been settled.

If the company has had a bumper year, investors can be in line for a handsome pay out, if it has struggled, the payment is likely to reflect that, too. It is up to the directors of the company to decide how much to award shareholders – and it’s a careful balancing act. Pay out too much and they risk leaving the company without the capital buffers it might need in times of stress; pay out too little, and investors will get suspicious, annoyed (or both) and dump the company stock.

For investors, too, it is not an easy choice. Some companies issue impressive dividends like clockwork but as a result, their stock is fairly expensive. Other companies issue lower dividends and are less certain to always pay out, but are more accessible. By watching company performance through regular reports to the stock market, shareholders should have a good idea of what level of dividend to expect.

Your capital is at risk.

Additionally, there is a key information point for investors using dividends to make money: the ex-dividend date.

Companies set out in advance when they intend to make their dividend payments and count back to a specific date by which an investor must be holding a stock in order to qualify to receive the payment. This is called the ex-dividend date and, unlike most investment platforms, at etoro, we pay you this little bonus on that day rather than wait around.
Armed with this information, investors can make an informed choice and over the next few weeks, plenty of companies are set to pay dividends to their shareholders. These include a range of household names.

Unilever, producers of washing powder and Marmite, which pays its shareholders quarterly, announced its ex-dividend dates as May 2, August 8 and October 18, so you have a few bites of the cherry there.

Retirement home developer McCarthy & Stone also announced its annual dividend of 1.9p would be paid to shareholders who were on the register on May 3, a day after the cut off date.

Some of our Popular Investors use this dividend-hunting strategy to boost their returns, so take a browse of some profiles and see how your loyalty could reap you the rewards.

Your capital is at risk.

eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFD assets.

Please note that CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 66% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.