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  1. #1
    Junior Member
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    Jan 2014
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    6

    Default Absolute beginner

    Am I wrong in thinking I would generally get a better return on my money if I held shares in a relative stable company, that pays a good dividend, rather than the online savers account at about 3% or 1 year term deposit at 4%? I see big companies with dividend yields between 6-7% - not sure if these yields are typical or not.

    I want to invest $5,000 in an income paying share with the goal of getting a better return than a savings account - do you think this should be achievable for a beginner? I'm assuming with a bigger stable company your more likely to get a dividend payout but the share price is unlikely to grow or decline much?

    Also would the cost of buying and selling a share be about $60 (i.e. $30 per trade, one to buy and one to sell?)

    Thanks

  2. #2
    Member
    Join Date
    May 2013
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    177

    Default

    I'm a growth junkie so no good with divi.

    You're right. For your quoted investment amount the Direct broking fees is around $30 to buy and then another $30 to sell. Gets higher depending on the amount to buy sell.

  3. #3
    The Good Banksie's Avatar
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    Mar 2013
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    Banks Peninsula
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    516

    Default

    One of the other forum member started this dividend yield site that may help with your analysis.

    http://www.dividendyield.co.nz/

  4. #4
    Guru
    Join Date
    Nov 2013
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    3,025

    Default

    Your right.

    The only caveat is that with a Term deposit, you are guaranteed (almost) to get the capital and interest back at the end of the term. With a share, there will be volatility so if you have a short term horizon, you may actually lose money.

    If you are saving for the long term, definitely shares. If you expect to spend that money in the short term (ie. home deposit or retirement spending), then some TD are good, otherwise 100% shares.

    There is a good chapter in Peter Lynch's "one up on wall street" on this topic.

    Ignoring regulatory/political risk, I would normally recommend the infrastructure stocks like the power companies (lines and gentailers), airports, telecoms, etc.

    Retailers normally give a good yield though they are a bet on the economy.

    Alternatively, the retirement stocks are currently giving a small dividend yeild but with good growth potential over the next few years.

  5. #5
    born2invest
    Guest

    Default

    I would highly recommend you read half a dozen books on the topic rather than taking financial advice from strangers on the internet.

    Type "dividends" into the search engine in your local library website.

  6. #6
    Guru
    Join Date
    Nov 2013
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    3,025

    Default

    Quote Originally Posted by born2invest View Post
    I would highly recommend you read half a dozen books on the topic rather than taking financial advice from strangers on the internet.

    Type "dividends" into the search engine in your local library website.
    Who you calling strange?

    Just buy some XRO - she'll be right

  7. #7
    Junior Member
    Join Date
    Jan 2014
    Posts
    6

    Default

    Thanks everybody for your input. So $5000 in XRO shares it is ...

  8. #8
    Member
    Join Date
    May 2013
    Posts
    177

    Default

    That'll buy you about 5 of them...hope you don't intend retiring any time soon

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