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Am i missing something here (investment question)

dingobingo

dingobingo

Banned
Dec 5, 2017
2,099
I'm probably missing something here. I just got robinhood, and I put down 500 to play with. I don't want to be a day trader I just want to invest into secure stocks that pay solid dividends. Why would I want to pay 200 dollars for a single share and get a 1.2 dollar dividend, when I can buy a cheaper stock and more shares for a comparable dividend but get more for $. Why does stock price matter in this case?

Dividends x amount of shares is how much you will make..
 

mrmoose

Member
Nov 13, 2017
21,175
I'm not an expert but isn't there basically a ration people look for as far as dividends vs. profit? Like if it's too high the expectation is that's going to get cut down really quickly and isn't considered "safe." So just looking at the largest "for now" payouts per investment dollar is usually not the way people do it.
 
moblin

moblin

Member
Oct 25, 2017
2,107
Москва
Because:
-the price of both stocks will be different tomorrow, and every other day at close, and making a naked calculation based on today's prices is short-sighted if you're looking to hold something for a long time
-the value of the stocks themselves are a factor in the overall value of your holding
-dividend payout can change over time, or be ended completely if the company decides to shift their strategy
-lots of factors can determine a stock's price, including whether or not investors think the company is likely to stick around and keep paying out dividends or whether they have a lower degree in confidence in it
 

Deleted member 11985

User requested account closure
Banned
Oct 27, 2017
4,168
Do you know that most trading platforms allow you to practice with fake money? I feel like you should do that first before you start throwing $500 around, unless you're rich or something.
 
Gwarm

Gwarm

Member
Nov 13, 2017
2,151
Just buy S&P500 and save yourself the trouble.

Sincerely, some dude with stock in Tesla.
 

Deleted member 49482

User requested account closure
Banned
Nov 8, 2018
3,302
dingobingo said:
I'm probably missing something here. I just got robinhood, and I put down 500 to play with. I don't want to be a day trader I just want to invest into secure stocks that pay solid dividends. Why would I want to pay 200 dollars for a single share and get a 1.2 dollar dividend, when I can buy a cheaper stock and more shares for a comparable dividend but get more for $. Why does stock price matter in this case?

Dividends x amount of shares is how much you will make..
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There are a lot of caveats because owning two different stocks can mean very different things with respect to the underlying companies. However, you're right - you want to look at the dividend yield for each stock. This will give you a simple way to compare dividends across stocks. A 5% dividend yield on a $200 stock and a 5% dividend yield on a $20 stock will net you an equivalent dividend in proportion to your equity.
 
OP
OP
dingobingo

dingobingo

Banned
Dec 5, 2017
2,099
MiHighGator said:
There are a lot of caveats because owning two different stocks can mean very different things with respect to the underlying companies. However, you're right - you want to look at the dividend yield for each stock. This will give you a simple way to compare dividends across stocks. A 5% dividend yield on a $200 stock and a 5% dividend yield on a $20 stock will net you an equivalent dividend in proportion to your equity.
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Yeah, that's what I thought. I just needed confirmation lol.
 

Deleted member 49482

User requested account closure
Banned
Nov 8, 2018
3,302
dingobingo said:
Yeah, I might reduce it to 100. I got abit trigger happy 😹😹😹
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I'm assuming this is your first account, but correct me if that assumption is incorrect. It looks like Robinhood does not allow any type of retirement accounts. If you don't already have one of those (an IRA or Roth IRA), you may want to look into opening one of those first.
 
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Gwarm

Gwarm

Member
Nov 13, 2017
2,151
Tzarscream said:
How much is that worth if you don't mind me asking?
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Tesla is trading at $256 right now and I bought it at $275 because it had dropped and I expected it to bounce back quickly.

For the S&P500 there are several different ETFs you can buy that track it. VOO is pretty popular and I think is in the $200 range right now, but there are cheaper options.
 
SapientWolf

SapientWolf

Member
Nov 6, 2017
6,565
Dividends get taxed unless you have a tax deferred retirement account so I wouldn't solely rely on them.
 
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