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The stock market has proven to be a very powerful tool for long term success. However, buying a stock and hoping it goes up is not the only way to make money from your security. Here are 3 different ways of making money from your stock which all investors can stand to benefit from.

1. The Stock Goes Up In Value

The most powerful way of making money is of course appreciation, if your stock goes up big then you can benefit from that big move. Judging from the past the yearly average stock market return tends to be somewhere around 10%. This in it of itself beats nearly every other investment out there.

But simply by looking for the strongest companies out there you can potentially find the ones which can give you a much higher return then that.

2. Dividends

A company can choose to pay their shareholders a portion of their earnings in the form of dividends. The stock holder takes on no additional risk for taking the dividends, it is more like a free income. Many dividend paying stocks can be pretty powerful because they are consistently paying off a nice return.

Looking to see if a stock offers a dividend before investing into it can really be a huge bonus.

3. Writing Covered Calls

Writing covered calls is often overlooked because it has to do with options, but that does not mean it isn’t extremely powerful. On the contrary, if you are consistently selling them it can be extremely powerful. The only disadvantage to this strategy is that you are taking on the risk of selling the stock.

When you sell a call you give another investor the right to buy it from you at a set price by a certain date. So if it happens to make a huge move you might end up selling it and missing much of that move. But even with this risk, covered calls have a huge potential and may even prove to be more profitable than the other two put together, especially if the stock you are in is not a big mover.

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