I'm totally green to investing, so I'm going to ask some very rookie and probably dumb questions. For those still reading...I very much appreciate your help!
So I was doing some research this morning into how dividends work. From what I've seen when considering a company to invest in for dividends you have to take into account how much is typically paid out in a dividend and how frequently dividends are paid out. Then I concluded that you'd want to consider what you're paying to obtain those dividends (ie. the stock price) to ensure you are getting a good return on investment.
During my research I stumbled on a company called Pitney Bowes (Company website:
www.pb.com/careers/; Google Finance:
http://www.google.com/finance?q=NYSE:PBI). They are currently selling at a low stock price ($12) and have consistently paid out around 37c to 38c per quarter since 2010. They also have a history of paying out high quarterly dividends since 1998.
So in trying to figure out the annual return on buying PBI from dividends, I calculate it to be 4 times 38c divided by $12 per stock for a return of 12.7%. Is my math correct?
So, that seems like a great return at its current stock price. Assuming I'm trying to assemble a balanced portfolio, it would seem to make sense to purchase some of this stock purely from the dividend point of view. Now, given their business model, it seems that their stock price peaked a long time ago, so I wouldn't be looking to buy this for returns through increased stock price. (They sell postage scales, which would have been a new technology in '98 when they experienced their highest stock prices - I expect there will always be demand for postage scales, but not growth in the industry...).
So am I missing something here? Or does this appear to be a good (hypothetical) investment?