Learn to Identify the Best Dividend Stocks

Picking the best dividend stocks in the market can provide you with a steady stream of income over the long term. Trying to decide between all of the dividend stocks can sometimes seem difficult, though. Here are the basics of how to identify some of the best dividend stocks on the market. 

Dividend History

If you are investing in dividend stocks specifically for the dividend payment, you want to make sure that you look at the history of the dividend issued by the companies. You want to find a company that has traditionally remained committed to offering a dividend. Some companies will cut the dividends that they offer significantly or eliminate them all together. By contrast, some companies continually bump up their dividend. For example, Wal-Mart has been committed to raising their dividend payment every single year since they have been in existence. While you may not specifically want to invest in Wal-Mart, you need to make sure that you find a company with a good dividend history. Otherwise, you could pick a company that decides to cut their dividend significantly or entirely after you purchase. 

Source of Income

When you are concerned with the dividend payment, you need to look at the company's sources of revenue. You need to determine how a company makes their money. Determine whether or not the revenue model looks like it would be good during all markets and time periods. Ask yourself if the company seems diversified enough to weather financial difficulties. 

Many people like to invest in monthly dividend stocks because of their highly diversified nature. They are traditionally holding companies, REITs or trusts. They hold a number of different assets and have many different strategies for bringing money in. By comparison, many of the other companies on the market rely solely on one business strategy to bring in revenue. Therefore, if you are concerned primarily with the dividend, you need to make sure that the company brings in enough revenue to keep up consistent dividend payments. 

Strength of Company

In addition to looking at a company's dividend history, you also need to assess the company's overall strength. A company needs to be strong and financially stable in order to offer a dividend to shareholders. A company is not obligated to issue a dividend, and when times are tough, many companies cut back on their dividends. You want a company that has remained strong in the market for a number of years. You want one that you know can weather a financial storm and still be fine. 

If a company is strong and values their shareholders, they will still issue a dividend regardless of what other companies are doing. This is the type of company that you want to find when you are using dividend investing as your primary method of investment. It can help you create a great passive source of income that is available regardless of how high the stock prices go. 

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