Polls / February 18, 2011

A share bought for 10 euros is sold for 11 euros after a 1 euro dividend is paid. How much did the owner make?

Sixty-two percent of respondents to the latest eZonomics poll correctly answered the hypothetical question on share earnings – saying that the owner would have made a profit of €2.

The basics of share investing
The eZonomics poll asked how much an owner made if they bought a share bought for €10 and sold for €11 after a €1 dividend was paid. The correct answer of €2 is the sum of the €1 capital gain plus the €1 dividend payment. In reality, trading shares may involve paying a commission or fee and tax on profit that might cut the total earnings.

Dividends are earnings too
Share investors can make (or lose) money as share prices rise (and fall). They can also make money through dividends – as detailed in an earlier eZonomics poll. Dividends are a way companies can share profit with investors but remember, not all listed companies pay dividends and there is no guarantee that companies that paid a dividend in the past will do so in the future.

Are shares right for me?
The eZonomics video The share market has risen. Is it too late to dive in? argues investors should organise their savings before considering buying shares. It outlines different “baskets” that investors can use for diversifying investment, including cash deposits, bonds, property and shares. Individuals circumstances – including stage in life and attitude to financial risk – will determine if shares are suitable for individual investors.

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eZonomics team
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