How to find the best dividend stocks
Buying dividend stocks could be a great investment option for you. In this article, we’ll explain what dividend stocks are, how to find the best dividend stocks, and how to make money investing in dividend stocks.
The top 10 best dividend stocks to buy
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What are dividend stocks?
A dividend stock is a stock in a company that pays out a portion of its profits to investors on a regular basis. These payments are known as dividends, and are typically paid out at the end of every quarter (every three months). Dividend stocks offer the double advantage of this added income stream and the possibility of accruing further value over time if the stock’s price rises.
Typical characteristics of dividend stocks
Dividend stocks are primarily defined as stocks that pay out regular dividends to investors. These payouts are usually quarterly, but can also be monthly, annual, or semi-annual. It is also worth noting that cash-based dividends can change over time, depending on decisions made by a company’s board of directors, and dividend payments can stop if a company falls on hard times. Growth-minded investors who don’t need access to dividend payouts often choose to reinvest those dividends into buying more shares and further growing their portfolios.
Are dividend stocks a good investment?
Dividend stocks can be a good investment, depending on your specific investing goals and the state of the stock market. Dividend stocks are often a popular choice for older investors who might be retired or semi-retired and looking for ways to generate regular cash flow from their investments. That said, dividend stocks don’t tend to appreciate as much in price as growth stocks, which reinvest their profits back into the growth of the company, so it all comes down to what your current investment goals are.
How do I find the best dividend stocks?
There are lots of ways to find the best dividend stocks, so we have compiled this list of different tips for you when searching for your next investment. All these points are explained in more detail below.
- Use experts and news aggregators
- Follow big players and wealth managers
- Look out for trends and societal changes
- Consider your own spending habits and the products you prefer
- Use stock screening tools and set criteria
1. Use experts and news aggregators
Sites such as Bloomberg and Yahoo Finance offer excellent economic insights and company updates, so if that’s the kind of content you’re seeking, those are good places to start. We also recommend you check out the news and analysis that we offer here on Invezz, as we publish regular stock analyses to help you make the right choices with your money. If you want up-to-the-minute updates on leading dividend stocks such as The Blackstone Group and Apollo Global Management, you’ve come to the right place.
2. Follow big players and wealth managers
The biggest investors are the ones that make the market move. Often called “whales,” these big investors consist of hedge fund, pension fund, and mutual fund managers as well as investment banks – some of whom manage portfolios worth hundreds of millions or even billions of dollars. Follow what those whales do, since they’re often well ahead of the curve when it comes to finding the next great dividend stocks.
3. Look out for trends and societal changes
As times change, new opportunities emerge for companies to grow, gain market share, and become great investment opportunities. For instance, the growth of smartphone usage in Russia, Armenia, and Belarus helped turn Mobile TeleSystems into one of the most successful dividend stocks of the past few years. Spot one of these trends early and invest in the right dividend stock, and you can generate a healthy income as well as increasing the value of your portfolio as the stock’s price rises.
4. Consider your own spending habits and the products you prefer
It’s not just macroeconomic factors that can give you clues about a stock’s potential. Just as societal changes in spending habits can be a good indicator of future investment opportunities, your own habits can teach you a lot too. If you’re excited about a new tech gadget that you started using, it’s likely that you’re not the only one. You can apply that enthusiasm toward investing in the stock of the company that makes that gadget.
5. Use stock screening tools and set criteria
You’ll find lots of stock screening tools and software online that allow you to sort stocks based on many kinds of different criteria. Since the goal is to identify top dividend stocks, you can set your search to sort stocks based on earnings growth compared to the size of their quarterly dividends. Yahoo Finance and Marketwatch are two of the best-known investing sites that offer those kinds of tools, and you’ll also find strong screening tools for dividend stocks right here on Invezz.
Are there any risks I should know about?
Yes, there’s always risk when it comes to investing. Opportunity cost is an economic term that refers to the opportunities you miss out on when you choose one decision instead of another, and is a term very relevant to dividend stocks. Dividend stocks carry opportunity cost, in that you might be sacrificing potentially bigger gains available to growth stock investors for the sake of collecting smaller quarterly dividend payouts.
Another risk comes in the form of bear markets: Stocks of all kinds, including dividend stocks, are subject to major potential losses when the broad market goes south. If there’s a market crash, you could even see many stocks stop paying dividends altogether.
What should I do now?
If you’re ready to invest, simply pick an online broker, select the dividend stocks you want to buy, and make your purchase. Still not feeling ready to invest? That’s ok. Check out the many easy-to-understand trading courses and up-to-the-minute news updates offered right here on this site.
- 1. How to find the best dividend stocks
- 2. The top 10 best dividend stocks to buy
- 3. Latest dividend stock analysis
- 4. What are dividend stocks?
- 5. Typical characteristics of dividend stocks
- 6. Are dividend stocks a good investment?
- 7. How do I find the best dividend stocks?
- 8. Are there any risks I should know about?
- 9. What should I do now?