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Stocks & Dividends

Boduthakurufaanu Street

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3 minutes
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One step away from becoming the next Ahmed Belfort

One of the ways to utilize your money to generate income is via the purchase of shares in a listed company.

 

A stock or share refers to a percentage of ownership of a company. This would mean that you are entitled to a share of that company’s profits (paid out in the form of a dividend) and depending on the type of share that you hold, you also have voting rights to direct the company during the General Meetings (usually held annually).

How to buy a share

You can either buy a share at an Initial Public Offering (IPO) where a newly listed company offers to sell their shares directly to the public. These opportunities will be posted on https://infinity.mv

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In the Maldives, this does not happen all too often with the most recent ones being Maldives Islamic Bank (2019) and Ooredoo (2017).

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Currently, you can purchase shares on the secondary market via a Stock Broker, meaning from someone who already holds shares in a company and is willing to sell:

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You can see what shares are for sale via this link: https://stockexchange.mv

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They also have a Telegram chat where the data is updated daily.

How to make money

1. Buying and selling stocks

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As in any business, you need to buy low and sell high. With stocks, however, it is easier said than done. The general market trend in the Maldives is usually upwards barring any unexpected changes to the economy (cough Covid-19).

 

Say for example, you bought 100 shares at MVR 15 each and you sold them at MVR 20 – you stand to gain a profit (referred to as a Capital Gain) of MVR 500.

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However, be wary of the following:

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  • Sales on the secondary market is usually at high prices 

    • ​The likelihood that you can make a profit out of the purchase in the future is dependent on the company (and the stock’s) performance.

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  • Sales on the secondary market is not as active as you would see overseas

    • You may go on for weeks or even months without a sale so you may be stuck with the share

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  • Purchase and sales of shares are subject to broker fees

    • The final 'profit' that you may receive may not be as high as you think​

2. Income from dividends

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A dividend is a sum of money paid to the shareholders (usually annually) out of the company’s profits or reserves. 

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The amount to be paid per share is determined at the Annual General Meeting. For example, BML decided to pay MVR 26 per share as dividends for 2019 so if you held 100 shares you would have received MVR 260.

Pro Tip!

Slow down Di Caprio...

 

Contrary to what Hollywood may have you convinced, trading stocks and relying on dividends is NOT a get rich quick scheme.

 

The dynamic is very different in the Maldives and investing in stocks should be seen as a long-term financial commitment and you must be ready to accept that you won’t have easy access to your money for some time.

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