Dividends

Guide: Learn everything you need to know about 2020 dividends

When investing in a publicly traded company it is important to know that the profitability of the stock is not the only way to earn money on the stock exchange, another way is to accumulate capital through dividends. How do I know which company offers the best options for my dividends? Check in our review all the necessary information to start investing in dividends.

What are dividends?

Dividends are profit share by a publicly traded company. These dividends (profits) are divided among all the shareholders of the company (the person who holds shares in the company), of course this distribution will be according to the investment volume of each one, that is, each shareholder receives the amount related to the quantity of shares he has.

Companies listed on B3 must pay their shareholders at least 25% of their net profit, but it is clear that some institutions are able to pay even higher percentages.

Dividends can be paid in shares or cash and depending on the company they can be paid monthly, quarterly or semi-annually.

Types of Dividends

Bonus: It's like a bonus. The bonus occurs when some high amount is paid to shareholders.

Extraordinary special dividend: They are usually dividends distributed in extraordinary events, as the name says, such as the sale of an asset that increased the company's cash.

Interest on Equity: There is a difference in taxation between interest on own capital and common dividend, in the case of the former it is taxed at 15%, whereas common dividends are exempt from taxation (more about this later).

How do you know if a company pays good dividends?

my dividends

Like everything else in the financial market, there is a logical way to know if the company has a good profitability and consequently pays good dividends.

The first step may be a little obvious: always invest in solid companies with a good reputation in the market, in addition, analyze your cash flow, this part of accounting adds a lot to investor decision making and lastly, the tip is more technique: analyze the Dividend Yield (DY).

In the market it is known as the companies' dividend thermometer, so it is very good to understand this indicator when investing.

To calculate Dividend Yield there is a very simple formula:  Annual dividends (paid per share) / current share price.

If a share of a certain company is worth R $ 100 and dividends (paid per share) R $ 8,00 the DY will be 8/120 = 6,6%.

Don't worry, if it got too complex for you, know that there are professionals in the field who can do this job and help you choose profitable companies. The important thing is to know that there is a step by step that can maximize your earnings.

Later on you will have a list of companies with good dividends only in the first half of 2020.

Here is a list of some of the most popular trading platforms:

  • eToro: Perfect for beginners; They have a demo account and one of the main characteristics is “social marketing”. The platform is very reminiscent of the meudividendos website, but much more complete.
  • Clear: Platform without a spread (trading fee) for the sale of CDFs (Contract for difference);
  • Documentation: It is among the top 5 for those who learn to trade. It is more focused on the binary options market.
  • XP Investimentos: One of the most popular and famous platforms in Brazil. It is in the top 5 of the best share buying and selling platforms.

We have compiled some of the basic information, with pros and cons of the platforms:

eToroClearDocumentationXP investments
eToro

buy actions

EToro is an international broker that enables the purchase and sale of shares, cryptocurrencies and other assets. Since its launch in 2007, eToro has won over 10.000.000 users worldwide.

Perfect for those just starting out in the market, it also offers its demo account for training and understanding of the platform, helping the beginner to have a better guarantee of success.

Another advantage, however, is that eToro does not charge any extra fees or commissions for negotiations, it charges only a small percentage referring to the withdrawal amount, varying over the amount you decide to withdraw.

  • Quick access
  • 0% commissions for buying shares online
  • Available in Portuguese
  • App available for mobile
  • You have a demo account
  • SAC only during the week
Visit eToro
Clear

buy actions

Clear brokerage is also a great option, although it is more dedicated to those who are more "aggressive" to invest their dividends or capital. It is good for both beginners and users who already know about the market.

Clear started out as the first brokerage firm that decided to abandon charging fees for purchases on the stock exchange, making it the most sought after by investors from all over Brazil.

  • 0% fee for using the broker
  • High profitability
  • Clear interface
  • Varieties for deposits
  • Few fractional options
Visit Clear
Documentation

buy actions

IQoption is also a stock and cryptocurrency trading platform. It has a good amount of currencies and assets, giving a more than satisfactory experience to anyone who decides to do business with the company. She had some slips in the past, and ended up being marked in Reclame Aqui, but we believe that IQ Option has already been working and a lot in the relationship with the client.

IQoption complies with all legislation rules and is authorized to trade its assets for its users in several countries.

  • Low initial deposit
  • Available in Portuguese
  • High return on success
  • Fast withdrawals
  • Slightly slower than others
  • Limited exchange options
  • There are a lot of complaints at Reclame Aqui
Visit IQ Option
Xp investments

XP Investimentos is one of the largest national stock investment brokers. It is a great option and a favorite to invest my dividends.

From its humble beginnings to the present day, XP investments has been performing in a spectacular way, scheduling both novices and experienced investors.

  • Platform for Brazilians
  • Access to shares worldwide
  • Regulated in Brazil
  • Fast withdrawals
  • Conversion of values ​​a little longer
Visit XP investments

How to start investing in Dividends?

To start investing in Dividends, you must first follow the steps below:

Step 1: What is your purpose?

In the first step, you need to identify whether you want to learn to invest, invest to live passive income or active income, or if you just want to have your first contact with the stock market.

Once you've made up your mind, look for a company that best represents your purpose. You can start with one of the platforms suggested below:

Step 2: How to choose your platform?

There are several platforms in the stock market, and several companies to invest in dividends. The companies we list are just a few of the most popular, which have already earned their space in the market.

Even if you are not ready to start investing, some of these companies even offer a demo account to get you used to the market before you decide to invest your capital.

Step 3: Register and trade

A good platform we mentioned is eToro. EToro has more than 10.000.000 users in its registered account base, and has worked with big names like Alec Baldwin (American actor who has played several roles) who is now his poster boy. With several years in the market, eToro remains one of the most used for the purchase of shares, buy Bitcoin with Paypal, and trading Bitcoins or in the Forex market.

One of the most used features of etoro is “copy trading” which is a tool that allows you to copy the movements of another user who has been successful in their trading on the platform. The minimum amount to start investing one is $ 200 dollars and the maximum is $ 500.000 dollars. EToro is a vehicle for investing in shares from abroad, and even Brazilian ones. You can buy the shares even through the broker, or you can trade with CFD.

The software has the ability to have up to 100 traders simultaneously and live. Users can also view millions of trades, statistics and risky actions from other traders.

eToro accepts several deposit methods, including neteller and paypal, which are virtual wallets. They also have a bank transfer, which can take a little while to clear in your account, as it is an international transfer. The best thing about this at eToro is that they do not charge any commission on the negotiations.

Let's take the step by step how to do:

Opening an account

Create your account on the eToro website. Name, email and password.

Identity verification

After signing up, confirm the email that will be sent to confirm the account. Click on the link and have your documents in hand, as you will need to take a photo for verification, in addition to having a proof of residence. This is normal procedure for all brokers, both national and international, because of anti-money laundering laws.buy actions

Fund deposit

Now that you have access to the platform, you can choose to make your first deposit and start investing in the shares, or you can go to the demo account if you want to try it out before you commit.

In the case of a deposit, you can choose the deposit method, and the minimum amount is $ 200 USD. Payment methods are many, including:

  • Paypal
  • Credit / Debit Card
  • Neteller
  • Skrill
  • Bank Transfer
  • And you can also choose your preferred currency (Dollar, Euro, Real and etc.).

my dividends
Choose the value, and click "follow".

Choose which stock you want to buy

Congratulations! After making the initial deposit, you can now click on the “watch list” and choose the shares you want to invest. Choose the stock you want to invest in order to be able to reap your dividends, and click "trade" in the upper right corner of the screen.

my dividends
On the screen you will have the options to buy or sell, click "buy" and "open position".

Now just enter the live transactions tab and click on "Actions" at the top that will show all the available options, use the filter for "stock exchange", or "my dividends", choose the one of your preference and click on buy .

You can decide how much you are willing to invest in the stock you want to buy and for which you want to make the investment. You can also program to stop trading when you reach the amount you want.
Buy Shares

Step 4: Tracking my dividends closely

As soon as you have bought two shares, you need to follow the world economic market, as transactions happen live and what happens in the world influences shares on the internet a lot. Therefore, it is necessary that:

  • Try to find out what happens inside the company's public memos;
  • Understand the dynamism of each sector and each activity;
  • Keep an eye on who are the customers and main suppliers in the companies in which stocks you have decided to invest.
  • Follow the policy and attitudes related to the central bank and world news.

my dividends

Paso 5: Always try to buy your shares and reinvest for sale

In your portfolio you will see all purchases made, including the shares you purchased. When you see that the shares you own are up, you can click to sell and redeem your dividends.

my dividends

This way, it will be available on the market and when someone buys it, you will be notified.
Buy Shares

Is it possible to live on dividends?

One of the best-known investors in the financial market, Warren Buffet, defends the idea that no person should depend on just one source of income. According to him, it is possible to minimize risks and avoid unforeseen circumstances with diversification.

Living off dividends is not only possible, but it can be a great way to generate passive income in your income (passive income is that money earned without investing a large part of your time, as in investments and rents, for example) and for that you don't need to be a great trader. The stock exchange is above all a place where it operates based on knowledge and strategies, so if you combine these two and know how to build an adequate investment portfolio, even with the help of an advisor, the chances of being able to live off dividends are great.

As previously mentioned, there is always a step by step to follow to leverage your results well:

  • Analyze the company;
  • Know the history of payment of dividends, if it has an inconsistent history over the years it may be a sign not to put it in your investment portfolio;
  • Plan for the long term. Investments in Variable Income tend to give much more profits when looking at the long term, because the oscillations of the market do not impact the exchange so much;
  • Always follow the dividend indicators (DY, for example);
  • Diversify your applications, so you are protected from any sectoral risks;
  • Opt for solid companies, companies like this are good dividend payers in general.

With regard to "how much does it take to live off the dividends paid by the company?" the answer is it depends: both on your cost of living and how much your investment portfolio is paying dividends.

It is also necessary to take into account that those who seek to live off the earnings in the stock market generally achieve higher returns. It all depends on how much you dedicate to build your assets and achieve good profitability considering your cost of living.

When are Dividends paid?

my dividends

There are platforms that can indicate the payment date, but the company's official statement announcing its profits, when and how much will be distributed will be on the organization's own website in an IR area (Investor Relations).

It is usually through this portal that the company discloses all information of interest to the investor such as results, balance sheets, projects and other communications. Bearing in mind that companies' payment policies may change in frequency (monthly, quarterly or half-yearly).

It is possible kinginvest my dividends?

Yes, you can use the dividends received from an application to reinvest them. When reinvesting dividends buying new shares it is possible to increase your equity faster, and with this movement you accelerate the effect of the famous compound interest, that is, you will receive interest on interest over the amount invested, increasing your earnings.

In addition to investing dividends you can also redeem them if you wish. This usually happens when you need some value in hand or simply because you already have significant equity.

There are several brokers that you can invest in stocks, including eToro, XP Investimentos and IQ Option. A great tactic is also to invest your dividends in an asset that has great profitability like Bitcoin. Check here how to Buy Bitcoin in Brazil.

Which companies pay good dividends?

As promised, it is time to talk about the shares that best paid dividends in the first half of 2020. This list was made based on Dividend Yield that showed dividends above the Selic rate, that is, they made it worthwhile to leave fixed income and go to Variable income.

COMPANIES DIV YIELD (2020.1)
AES TIETÊ (TIET11) 9,5%
TAESA (TAEE11) 8,0%
ISA CTEEP (TRPL4) 7,8%
ENGIE (ENGIE3) 7,4%
BR DISTRIBUIDORA (BRDT3) 7,4%
GERDAU (GGBR4) 6,0%
SANEPAR (SAPR11) 5,7%
CEMING (CMIG4) 5,5%
KLABIN (KLBN11) 5,0%
COPASA (CSMG3) 4,2%

Source: XP investments.

Provisioned Dividends

There are also the so-called provisioned dividends, which is when the company, before making the dividend payment, discloses the amount it will pay as a dividend at a future date. The investor can view this payment in his account on the broker's website where he is registered, but while it is provisioned, it is not possible to use the redemption amount or to reinvest it.

Dividend Taxes

This is a subject that is widely discussed in Brazil today, because during the current public health crisis, the Minister of Economy, Paulo Guedes, informed that he is formulating a proposal and that he wants to start collecting dividend taxation.

For more than 20 years, there has been no tax on dividends, that is, companies take too many taxes to be working properly, but the net profit that is shared among the shareholders currently has no taxation.

The idea of ​​collecting dividend taxes, according to the minister, is to rearrange the taxes and duties paid in order to be more efficient and stimulate economic activity. This change, however, will take effect after congressional approval along with a larger package of tax reforms (as it is a bill it is normal to go through this process) and there is still no certain date to go into effect if it is approved.

Important Tip!
Another way to maximize your earnings to the maximum, in addition to reinvesting dividends as already mentioned, is to make periodic contributions. Adding this to the long-term issue and a possible valuation of the stock, it can make your assets grow even more with this movement.

Conclusion

It is always good to remember that you must know yourself and know your profile as an investor, when opening an account with any broker, it is possible to do the API (Investor Profile Analysis). The stock exchange is generally indicated for more aggressive investors, but even the most conservative who are curious to know how the stock market works, can seek to understand how the dividend mechanism works and enter the stock market.

Another important point to remember is that the financial market is a place that requires knowledge and strategy, so when entering this world it is essential that you surround yourself with knowledge and theoretical basis, if you need to seek help from professionals in the field to help you.

That said, when it comes to dividends, it is easy to see that it is one of the biggest attractions of the stock exchange, as it is a great way to leverage your equity. Know the company, the sector that performs the activity such as accounting fundamentals such as cash flow and Dividend Yield. These factors are essential to guide your investments.

Another interesting point to note is that Variable Income became a very strong attraction after the decrease in the Selic rate, in the table with the companies that pay better dividends this year, Dividend Yield in all is higher than the Selic rate, which makes it is worth taking a little more risk if it is to maximize profits.

FAQ

What are Dividends?

Dividends are also known as the share of profit that publicly traded companies make. Investors, also known as shareholders of the company, can collect their investments according to the volume of their shares or participation.

What is the use of the My Dividends website?

The website Meusdividendos.com serves as an organizer for the investor to follow the path of their investments, with progressions in real time. The site also has a part of the community that can be used for discussions and other types of consultation.

Can I buy shares directly from the My Dividend website?

Unfortunately investors cannot buy shares directly on my dividend website, as it serves more as an organizer of users' assets. There are other regulated platforms that have the same functionality, and even have several assets to invest. Confirm more on this page.

What is Dividend Yield?

Dividend Yield, also known as dividend income, is a tool used to measure the performance of companies according to the remuneration distributed among their shareholders. To calculate Dividend Yield there is a very simple formula: Annual dividends (paid per share) / current share price.

Follow Cryptoeconomics on social media!