Australian Dividend Stocks: The Best Kept Secret Of The ASX

This is not an article for the veterans of the ASX, you’ve been keeping Australian dividend stocks a secret for too long – the good and noble new investors of the country, this is the secret they didn’t want you to know about. If you’re new to the marketplace, maybe you just downloaded the latest platform that allows you to use your coffee chump change to invest – this article is for you.

You’re the ones probably wondering, what are Australian dividend stocks?

Excellent question. This is why you’re here after all, to learn the best kept secret that you’ll be taking with you on your investment journey to the moon, and beyond. Of course, invest responsibly, and always do your research before jumping into any investment strategy – now, let’s jump into Australian dividend stocks.

So, What Are Australian Dividend Stocks?

Essentially, when companies are listed on the ASX they can elect to pay their wise investors a slice of the profits (if there are any) from the financial year that had passed, these are known as Australian dividend stocks.

Say you were an electronics and supply chain company and offered Australian dividend stocks as an option for investors, then your last two years would have been very profitable indeed, so profitable that your profits for the year have had a percentage delegated to the people who believed in you from the very beginning (of the financial year anyway).

Companies that offer Australian dividend stocks are usually quite vocal about their achievements, however, it is a double-sided blade, if there are not profits, the Australian dividend stocks will not be ringing the bells of monetary gains. It is essentially getting a little extra money in your portfolio for making a smart investment choice, how to determine the choice to make – well that’s a whole other article.

Short Term Or Long Term?

Many people ask if it is better to consider Australian dividend stocks to be a short term or a more longer-term strategy. We cannot speak for everyone as companies can elect to make these payments or not, and if they do, they decide how many times a year it occurs.

All that is a roundabout way of saying the payments from Australian dividend stocks typically only occur a few times a year. So, if you’re investing for short term gains, then perhaps this strategy is not in your wheelhouse. Again, we are not giving official advice. This is purely for informational purposes.

Always Diversify

What we can tell you with some assurances from the powers that be is that diversifying everything is the key to a successful, or at least, less stressful existence. You know the term, ‘don’t put all your eggs in one basket’, this applies to your portfolio as well, including these wonderfully adaptive Australian Dividend stocks.

Consider it like this, if you have invested your entire nest egg, portfolio, kids’ graduation money and the kitchen sink into one company with the hopes of a big payout when the profits roll in – you are hedging a lot of money on the chance that this company will not run into any issues that can impact its profits. Remember 2020, and also remember people invested heavily in air travel the year before.

Moral of the story is, always make sure you are keeping your portfolio nice and multi-faceted, cover your bases across the industries and research and support the companies that you truly believe in instead of just looking for profit. This will make the payout day all the sweeter.

Invest wisely friends, and always do your research.