Which are the Best Shares to Buy ?
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We are often asked, which are the Best Shares to Choose ?
With Shares the answer is two-fold as it depends on whether you are after a steady long term stream of income from dividend payments, or whether you are more interested in Capital Growth. Income or Dividend Payments you receive from a stock are similar to the rent you would earn from renting out a real estate property. It is also similar to the interest money you would receive from a bank term deposit or investment fund.
Capital Growth can be described as the Price Apprciation of the share. This is somewhat likened to the increase in value of a property or asset you may have. When the value of your stock or asset gradually appreciates over time, this is termed Capital Growth. Stocks broadly fall into two distinct categories, Growth Shares and Dividend Yield Shares, and many stages in between.
When choosing a share from either of these two extreme range distinctions it is purely up to the individual in terms of their needs, time frame and risk appetite. Some individuals may prefer an investment that is virtually guaranteed safe and secure but pays a small dividend. Others who are more risk tolerant may choose to invest money on the chance a small gold explorer finding gold and the stock rocketing up 800% or more !
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Combined Dividend Yield and Capital Growth
Big and Established Companies that payout nearly all their earnings in dividends are not going to grow by much but you can enjoy a healthy 5% to 10% Yield on the investment simply from the dividends. Sometimes this may be better than bank deposit returns but also deliver a mild increase in capital value over time with possible bonus payments along the way.
The better investment decision may be to find a Mid Sized Company, often called Mid-Caps, that are somewhere between a penny stock and big established blue chip company. You can often obtain great dividends but also enjoy the bonus of great capital growth. Many of these mid-sized companies have great stability and security so your money is still very safe.
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| Dividend Yield and Capital Growth are two very important elements in Stock Investment |
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Finding the Best Shares to Invest with some Suggestions
When selecting stocks to suit your investment style it is best to do a lot of research and try to find out as much as you can about what the company does and how it makes its money. Whether its a Dividend Share or Capital Growth Company it is important to make sure they have a good history of reporting consisent profits and income stability. It is no good investing in a company that makes a history of losses, or strong fluctuations of profit to loss.
Many Investment advisors would recommend to choose a share with good stability, Medium Dividend Yield and Moderate Capital Growth with good forward looking future opportunities and prospects. Some examples of these types of company shares might be Supermarket Conglomerate company Walmart, or a Media Advertising and publishing company like News Corporation or known and trusted name like Coca Cola Amatil.
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