By buying one share, you expose yourself to unnecessary waste of money.
At least in terms of the fees you have to pay for the transaction. However, if you receive a dividend from the share, it will not cost you to buy it. You can cover the fee, for example, from a dividend or an increase in the value of a share.
Investors sometimes buy one share at a time for several reasons. Perhaps because they want only one specific share, the value of which is so high that they simply cannot afford it. Or they only have enough money in their trading account to enjoy the acquisition of only one coveted share. Alternatively, they buy for sure with the vision of paying a dividend, which will pay the purchase fee and there is something left. However, this is assuming that the dividend will be really high even after the fee has been taken into account. If you buy a share of Telefonica O2 or a CEZ share, for example, the result will be contradictory. On the other hand, you will succeed at Komerční banka or Philip Morris.
Before trading stocks, you should know the basic concepts of stock market behavior, capital markets and have a clear idea of what a dividend is and how high you want it. Without this knowledge, you run the unnecessary risk of ignorance.
When the fee is higher than the dividend
The value of the dividend paid out for Telefonica last year amounted to 40 crowns. The fee within the RM-System is 0.4 percent of the volume per transaction, but at least 40 crowns. By purchasing one share of Telefonica O2, you will hardly cover the fee, because 40 crowns in this case is both a fee and an untaxed dividend. You won’t earn much even if you buy one share of ČEZ. The gross dividend for 2010 was set at 53 crowns. After deducting the 15 percent withholding tax, the net dividend yield is CZK 45.05. Subtract the fee from this amount and the result is five crowns and five pennies. Also nothing much.
The dividend is higher than the fee
The shares of Komerční banka or the Philip Morris tobacco group have the opposite effect. In both cases, buying one share of these companies can pay off. You will earn less than two hundred CZK on Komerční banka’s dividend, even after the fee is included, and you could come up with a nice thousand crowns with Philip Morris.
However, do not expect dividends to be the same in the future. Philip Morris has drawn on retained earnings in recent years, and the dividend is likely to fall.
Risk of quarterly dividends paid
If you use the e-Broker trading application to purchase shares on foreign stock exchanges, the fee is set at four dollars for each transaction. For example, buying a share of StoneMor Partners L.P., a funeral home in the United States, may or may not pay off. You must hold the stock for at least a year to get a return on your investment. If you held it for only one quarter and then sold it, you would lose the entire transaction. The amount of the last dividend at StoneMor Partners L.P. was 58 cents a share.