Hi all, I'm a new investor and have a question to ask regarding dividends: Are they worth it? I'm a bit confused so let me give you an example:
Company ABC is trading at $10 a share and I decide to buy 1000 shares, so I have invested $10,000 into ABC. This year they have decided to pay 20c per share fully franked. That means I get $200 back in cash (no DRP). But as we all know the price of the stock will fall roughly by 20c so even though I have pocketed $200 into my account, the value of my ABC shares have fallen by $200. So it seems to me that I've got the same value as I had before by in two different forms now? Also a $10,000 investment just to get back $200 seems very low indeed [Lets assume term deposits at the banks are 1%, so I understand it's relative ] Why do people specifically look for high yielding dividend stocks? It seems you'd have to have A LOT of money to begin with to get a good return. Your insight is much appreciated!