What are the advantages of holding shares? By holding shares, you have the potential to share in the success of the company through Dividends or Capital Growth, the better a company does the higher the investment returns. Dividends A dividend is a payment made to shareholders out of company profits. Not all profit is paid out in dividends. Some is reinvested in the company (sometimes all). But it is not necessarily a bad thing for the shareholder if dividends are not received. If profits are ploughed back into the company, the company may grow and in turn mean increased value of the shares. This is of course an advantage to the shareholder. Capital Growth Capital growth occurs when a rise in the share price gives you the opportunity to sell your shares at a profit. Capital growth is not certain as it depends on what happens to the share price, which can be affected by a number of factors. It is also possible to have a capital loss if the share price falls.
Posted on: Fri, 14 Jun 2013 17:35:43 +0000