How to earn dividends on eToro regularly? Dividends are another way to earn income from stocks. If you are copying me on eToro, I’m sure you know we receive cash dividends every other month.
On this page, I’m gonna talk more about dividends and how to choose the stocks that pay dividends.
What are Dividends?
Dividends are payments, in the form of cash or stocks, made by a corporation to its shareholders, usually as a distribution of profit or cash reserve. When a company makes a profitable performance, it rewards its investors for putting their money into the company by distributing dividends.
How to Earn Dividends on eToro?
1. Hold Your Shares for Long Term
What I like most about dividends is that you’ll earn money just by holding the stocks, no matter who you are – the CEO, a major stockholder, or anyone with just a few shares, as long as you are holding those shares of stocks before the Ex-Dividend Date, you will earn your profit.
Per eToro rules, you must hold those shares 2 days before the ex-div. date.
2. Choose the Best Companies that Pay Dividends
Not all companies pay dividends. Many companies like Tesla (TSLA), Google Alphabet (GOOG), and Amazon (AMZN) do not pay dividends because they decide to use their earnings to finance future growth of their companies. But that doesn’t mean these companies are not profitable. They just prefer to re-invest their income to expand their business to make more income.
There are still excellent companies that pay dividends like Apple (AAPL), Microsoft (MSFT), Coca Cola (KO), Mc Donald’s (MCD), Starbucks (SBUX) and many more because they want to reward their investors for putting their money on their business.
It also attracts more investors, therefore, growing the company’s market capitalization. An average of 1-2% dividend yield is good.
3. Diversify Your Investment
Because some companies pay dividends quarterly, some every six months, others just once a year. And it doesn’t mean that they will pay again in the future.
You have to diversify your money to invest with different dividend-paying companies so that you will have more opportunities to earn dividends.
4. Copy Trade an Investor Invest in Dividend-Paying Stocks
Our portfolio on eToro is optimized to earn dividends regularly. Our copiers are earning small income through dividends every other month whether the market is up or down. We continue to choose topnotch stocks with high growth potential. If you want the same strategy, you can copy TradeCatalog.
How to Choose a Dividend Stock?
Step 1: Look for Consistent Profit and Consistent Dividends
If the company generates consistent profit, it will likely reward consistent dividends. List down the company’s earnings in the last 5 years together with their dividend history records. If the company’s earnings are increasing each year, it will usually continue paying dividends to its investors.
In this example below, we look at Microsoft’s past earnings if it meets its estimates, we also check their dividends history in the last 5 years. As you notice, MSFT is very generous giving out dividends consistently every quarter.
Step 2: Check Out the Company’s Financials
You should know the health of a company before you invest your money. Check out its balance sheet, cash flow, and income statement. If its debt-to-equity ratio is too high, forget about it. We like using Investing.com and Yahoo Finance in analyzing a company profile.
Step 3: Look for a Decent Dividend Yield with a Reasonable Payout Ratio
Dividend Yield is the company’s annual dividend divided by the price of its shares. The higher the dividend yield, the higher the money you will receive as dividends. But do not rely on a high Div. Yield alone because too much dividend yield might also be a red flag.
Consider a company’s Payout Ratio. This measures the ability of the stock to pay dividends. Payout Ratio is a stock’s dividend divided by the EPS (Earnings Per Share). Simply put, the lower the payout ratio, the better for a company to produce more dividends.
Risks of Investing Dividend Stocks
Always remember that trading in the stock market is very risky and not all stocks that pay dividends would always grow over time. Stocks may fluctuate and fall any time affected by market sentiment, economic factors, earnings results, pandemic, bad news, and global financial crisis.
How to Check Dividend Earnings on eToro?
- Go to Portfolio then select the Clock icon
- Set the time frame you want to view
- Tap the Gear icon and select Account Statement
- Select the Start Date and End Date
- Download the Excel File Statement
- View the Transactions Report Sheet
- Check Payments caused by Dividend
Notice that rollover fees are payments from dividends. You can check which stock issued those dividends by finding the position ID that corresponds to those trades. Copy the position ID and use Control+F command for Windows or Command+F for Mac.
Are You Ready to Earn Dividends?
Beginners and experts can earn dividends on eToro by investing stocks. Follow your investment goal, stick to your strategy, and know your risk appetite. Create your eToro account now for free!