Free Money! – October 2015 Update

Ahoy Mateys!

This is the Captain speaking with my feathery companion Norry to discuss finance!

Welcome to another month of money (and life)…and other things!

Today we shall be talking about dividend income!

-What the heck is dividend income?

When companies on the stock market make a profit, they can choose to share it with the stock holders. For every share in the company you own, you get a share of the profits. That’s a dividend!

I used to own stock in 28 companies that provide dividends, and all of them would grant the dividends at different times of the year. Some are quarterly, others annually, and the pay dates vary all over the place!

This is good though because it means every month of the year I get free money from the companies I have shares with!

-Free money? 

Yup! I didn’t clock in at any of these companies, no overtime, no work at all. Just by being a shareholder, I get a piece of the profits.

-You had to pay for the shares you fish stick.

True, but I can pull that money at any time. Once paid out, the company can’t get it’s dividend back. It’s mine to do as I please.

-Dare I ask what you do with it?

Normally I would have reinvested, but this month I actually sold ALL of my stocks and cashed out my fund.

-WHAT?? Why??

I’m buying a house! Something people are getting pretty tired of hearing about probably, but its a huge thing in my life and this is my blog so I’m going to keep talking about it.

By cashing out my fund, I have some cash to buy furniture and stuff I need for my new place. Personally, I think that’s a pretty good use of the money.

Good news is that I was able to wait till all my dividends were in before cashing out so I maxed out my return!

-All right, I’m starting to get interested. So how much free money did you get last month?

I earned $13.83 in dividends for October 2015!!

-…That’s it? 

Hey now! It may seem a little low to you my feathered friend, but that is still a potential lunch completely paid for by multiple companies.

Here’s the breakdown:

Bank of Nova Scotia (BNS): $2.52

General Electric (GE): $2.09

Coca Cola (KO): $2.04

Philip Morris (PM): $3.20

WP Carey Inc (WPC): $3.98

-I thought you said you owned shares in 28 companies? Only 5 are listed here!

Yup, only 5 of the companies paid out dividends last month.

Perhaps amusingly, despite not having a penny invested currently, I may still get some dividends this month.

-How do you figure that?

To pay out the dividends, the companies record how many stocks you have to calculate how much they will pay out. The day they record my be weeks or even months before the pay out date.

I was expecting 8 dividends next month, and I may still get all of them due to the recording date being before I sold my shares.

-Sweet.

Well, that’s all I have for today. You have any other comments Norry?

-You should invest in worms.

I shall keep that in mind.

Until next time, avast ye scoundrels!

Photo Credit: (c) Dim Dimich

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