I am interested in stock market investment. I took this free Udemy “Stock Market Investing for Beginners”. I decided to summarize some of the key takeaways I got from this course.
Two ways to make profit from stock market
1- Capital Gain when the price of your stock goes up. For example, a stock bought at price 100 and sold at price 110 will earn you 10$, a 10% profit.
2- Dividend Yield which is the money companies decide to distribute on its’ shareholders. Notice that companies can decide to whether to distribute dividend or not. It is a rule of thumb that stable companies, expecting no capital gain , distribute dividend. On the other hand, growing companies, expecting high capital gain, hold dividends.
This chart shows Nvidia dividend yield and how it decrease or increase as the projected stock price increase or decrease. In Nov 2017, Nvidia is a promising company for investment due to its projected growth. This explains why dividend yield curve is going down at such time.