Hi.
Enjoying the app, enjoying reading through the amount of stocks & all the different unknown companies and trading what they do. Question I have is, as a complete novice, do I invest in Us dividend companies or UK companies. I’m in the UK, should it make a big difference? Thanks in advance.
Hi
You can invest in either. With US companies, most of them are subject to a 15% dividend withholding tax. That means that you only receive 85% of the amount the company paid out. This is done at the source automatically so you don’t have to do anything.
Personally I find that most of the best dividend companies are in the US so that’s where I mainly invest. They virtually all pay quarterly, and some monthly. There is also more of a significance placed on annual dividend growth, which to me is a very important metric. Do some thorough research before choosing to invest - Dividend Aristocrats, sometimes called Dividend Champions - can be a good place to start. The more learning you do now, the more successful your investing is likely to be.
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Good advice from @Baggyb.
But if you are UK based you might also want to consider UK dividends as well. There are also an equivalent list of UK Dividend Aristocrats/Champions who continuously increased their dividends over a long period of time. But being on the list is no absolute guarantee . An example was Shell that paid an unbroken stream of dividends from WWII onwards. Until this pandemic started and they stopped the dividends.
Also assuming that you are UK based then you may need to consider that any dividend paid in dollars would also be subject to fluctuating exchange rates when converted to £s.
Finally instead of buying individual shares, you may want to consider buying ETFs to get a portfolio of dividend paying companies.
Much of a muchness really. You’ll pay withholding tax on US stocks or stamp duty in the UK. Aside from yield, the most important things for a high yield portfolio are size of company, dividend growth, dividend cover and sector diversification, which is often overlooked.
I’m a wee bit perplexed as to why so many people seem to go for income over growth while in the accumulation phase. I’d have thought the pandemic: with firms cancelling dividends left, right and centre: would have deterred people but each to their own.
Thanks all once again. Great advice.