Annual profit from a dividend?

Question

Let's say I buy 11,000 shares of GE stock currently trading at roughly $27. The company's div and yield are 1.24 (4.60%). How much annual profit would I have just from dividends?

Answer 1

dividends aren't the same as profit.

obviously, here you could make 13,640/year, but your actual gains/losses depend on what happens to the stock price, too.

Answer 2

The simple answer is "4.6%" of what you invest. You should have been able to figure that out.

And yes, your money is still at risk and you will have profit or loss from the stock price.

One other risk is that during bad times companies can cut their dividends. But during good times they increase them.

IMO, the GE dividend still looks solid as they are still generating decent earnings and the dividend is not too large a percentage. Some companies are paying out more than they are currently earning so the dividends continuing is doubtful.

The banks were a good example of that. They were paying high dividends but now most are cutting them to cover losses in the mortgages they hold.  

One big benefit of a high dividend stock is that they are paying you to hold the stock until the price recovers. You don't care if it goes down some from here if you believe it will recover. But the higher the dividend, generally the slower the stock price appreciates.

On the other hand I have one stock now paying me about a 15% yield on the price I paid for it years ago. :-)    

Good Luck.

Answer 3

11,000 x 1.24 = 13640 less taxes, I think.  What is your tax rate?