Guide to Investing in Dividend Stocks
Whether you're new to investing or you've been in the game for a while, you've probably heard the advice: diversify your portfolio. It's never a good idea to put all your eggs in one basket, especially when it comes to investing. One significant dip and you could lose a majority of your investment.
When you're considering what to invest in, you want to look for a variety of different kinds of investments. Dividend stocks are a very safe and secure investment type to consider adding to your portfolio.
Dividend stocks are essentially a great way to get rich slowly.
Let's start off with the basics; what are dividend stocks?
Dividend stocks are a type of stock you purchase from companies that pay out dividends to their stockholders. Each quarter, you receive a small payment for every share of a dividend stock you own.
The reason dividend stocks are so powerful is because the investor receives a small amount of money, consistently, and over a long amount of time. Dividend stocks are a long-term game. As an investor in dividend stocks, you want to look for companies that have a history of success and consistently high dividend payouts.
The answer is simple: dividend stocks are a safe investment.
The stock market can be volatile, meaning you're taking a risk with your money when you invest. By investing in dividend stocks, you're lowering that risk.
Dividend stocks are typically those of more established companies. In contrast, younger, faster-growing companies are reinvesting investor money into the company, instead of returning it to investors in the form of dividend payouts.
Dividend stocks, because they are part of more mature companies, tend to be less volatile than other stocks and they're able to weather recessions and crashes with better success.
Now that you understand what a dividend stock is, you probably are wondering which dividend stocks to buy. As with every investment, there are some dividend stocks that are a better investment than others.
How do you know which those are? There are a few important factors to look at when choosing which dividend stocks are right for you to purchase.
Many investors' first reaction when looking to purchase dividend stocks is to look at their yield. The yield is the ratio of the annual dividend compared to the current share price. Yield is expressed as a percentage.
While a higher yield percentage is valuable in terms of dividend stocks, it's not the most important factor. It's also important to assess dividend consistency and company growth over time. For example, you'll find many companies with dividend yields above 5%. But, then there's Johnson & Johnson, which pays a dividend yield of 2.6%. That sounds low, but when you see that the company consistently pays dividends and has increased its dividend for 54 consecutive years, you can see the wisdom of investing in lower yield, safe dividend stocks.
Dividend stocks are intended to be slow growing and consistent, so reliability is often more important than a high yield.
If you're new to investments, you have an even safer option than dividend stocks. Instead of investing in dividend stocks from just one company and risking a failure, you can look for ETFs that specialize in dividend stocks.
If you're still learning about investing, be sure to read through our articles on Dow stocks in addition to the below articles on dividend stocks.
Investors looking for income have had few choices in recent years as interest rates have stayed close to zero.
Now, of course, to fight the COVID-19 pandemic, the Fed has lowered rates to zero, making stocks the only opportunity for yield-seeking investors.
Dividend investing is more popular than ever right now.
But not all dividend stocks are worth owning.
Today, we're separating the weak from the strong to show you only the best dividend stocks to buy in June.
Investors looking for income have had few choices in recent years as interest rates have stayed close to zero.
Now, of course, to fight the COVID-19 pandemic, the Fed has lowered rates to zero, making stocks the only opportunity for yield-seeking investors.
Dividend investing is more popular than ever right now.
But not all dividend stocks are worth owning.
Today, we're separating the weak from the strong to show you only the best dividend stocks to buy in June.
As we see selling coming back into the stock market this week, there will be a lot of speculation about what stocks to buy as prices decline.
Overthinking things and trying to get too fancy is one of the greatest mistakes investors can make.
In bad markets, the key to getting rich during the inevitable recovery is to buy great companies at steep discounts.
Finding great companies is easy.
Assembling a list of "dividend aristocrats" that have grown their dividends for at least 25 consecutive ways is one of the best places to start.
Once we have that list, I'm targeting businesses with high yields that can survive the pandemic and thrive when the economy regains healthy footing.
Here are my top 3 "pandemic proof" dividend stocks to buy today...
The Walt Disney Co. (NYSE: DIS) is one of the greatest companies in American history.
Over the last few decades, some of the "best in class" management has taken Walt Disney's vision and turned it into an entertainment empire.
There is a lot to love about the Walt Disney Co.
The price of oil has fallen as much as 57% since the start of the year.
There was even a point this year when demand for was so low, the price of oil went negative.
That means people were getting paid to hold oil.
Today, we're going to tell you what that means.
Then we're going to show you a couple high-yield dividend stocks you can buy to profit from the historic oil price collapse.
One of our best high-yield dividend stocks right now pays a yield of 19.66%.
Oil prices took a historic plunge this year.
At one point, they even went negative.
Investors lost their minds.
But would you believe this unprecedented crisis can actually be good for some oil companies?
Crude has plunged 46%, from above $60 to near $15.
That's accompanied a huge selloff in top oil stocks like Royal Dutch Shell Plc (NYSE: RDS.A).
The company has lost about 44% since the beginning of the year.
But that does not mean it's time to ignore oil.
You just have to shift your strategy a bit.
Today, we're going to show you a dividend stock that actually benefits from plummeting oil prices.
The market bounced back sharply in April, but remains well below its all-time highs of mid-February.
Investors are optimistic that the U.S. economy will reopen sooner than later, a hope that most of the concerns about COVID-19 have been overdone.
With that in mind, investors have a unique opportunity to purchase several stocks that will survive the COVID outbreak and thrive in the years ahead.
Best of all, these companies pay safe, reliable, and - in some cases - lofty dividends.
These are the best dividend stocks to buy in May 2020.
The Federal Reserve's recent decision to push interest all the way to zero has millions of investors scrambling.
Clearly, now is not a good time to be buying bonds for retirement income alone. Their rates have also plummeted.
That leaves many investors looking for good dividend yields at a time when the economy is weakening.
You need look no further than tech.
The sector has quietly come to dominate corporate balance sheets in terms of cash on hand. That means two things.
First, tech is a great place to find yields. Second, these cash-rich firms are least likely to cut their dividends in a recession.
Indeed, nine tech companies in the S&P 500 alone hold more than $350 billion in net cash.
And these three dividend stocks currently offer the safest yields in Silicon Valley...
Markets are swinging violently on speculation about Washington's response to the coronavirus pandemic.
The Dow has plunged more than 35% from its all-time highs in February as the outbreak effectively shuts down the global economy.
Many looks at this as a great time to buy stocks cheap.
It's important to note, however, that some blue-chip dividend stocks may not recover.
Even if it looks like a "bargain," some stocks that were once attractive buy-and-holds are not what they were a few months ago.
Right now, the S&P 500 is sitting at 2,386.
That figure is roughly 18 times earnings and is getting very close to reaching fair value.
The pullback has brought the S&P down to a critical support level near 2,350.
And now many investors are seeing this as an opportunity to slowly begin buying stocks with strong balance sheets and dividends.
If you're looking for guidance and are eager to put money to work, it's important to be cautious.
But you can start by purchasing solid companies that will thrive during the coronavirus outbreak or will be the key survivors once the pandemic passes.
Here's why you should consider dollar-cost averaging into the following top dividend stocks...
This week, the coronavirus has triggered two circuit breakers to halt trading. The viral panic over coronavirus has turned into a fiscal pandemic. The Dow is now off more than 27.6% from its all-time high in December. The index hasn't been this low since Summer 2017.
Panic is only increasing as the COVID-19 problem gets more serious. Many investors feel they're stuck riding this with no answer.
But that is not the case. If you're sitting on any cash right now, many U.S. companies are trading at very attractive valuations. This would be the time to buy some top dividend stocks to hold over the long term.
Monday's 2,000-point pullback has fueled a significant amount of concerns in the market about the stability of the U.S. economy and current valuations in the market.
The ongoing battle with COVID-19 has stopped cruise ships, airlines, and hotel companies in their tracks.
We've seen Italy effectively shut down its economy.
Last night, the Prime Minister announced the country would begin quarantining its entire population of 16 million citizens.
And the spread continues across more U.S. states...
So today, I'm highlighting three different dividend stocks to buy with the recent market pullback.
It's safe to say we're on our way to 0% interest rates.
And possibly negative ones after that.
Should the global economies come together to prevent a massive outbreak, lower rates would likely fuel a quick rebound of the equity markets as investors pile back into equities and push us back to new records.
That's just how cheap money and asset prices have worked over the last decade.
However, even if this process is more prolonged, now is the best time for investors to start looking for stocks that can outperform in the long-term and offer terrific dividends in the process...
Today, we are digging into three dividend stocks to buy in the wake of the recent market pullback and Fed rate cuts.
This week has seen one of the most remarkable sell-offs in recent history.
Fears of the coronavirus spreading have moved markets into correction territory.
This morning, the Dow Jones Industrial Average was down another 1,085 points (4%) in early trading.
Remember, panicking is the worst thing you can do right now.
Make no mistake, it's only natural to worry when the markets fall so sharply.
But this is the time that maintaining a disciplined investing approach is so important.
You can't let emotions drive your decision making.
One way to maintain that discipline is finding discounted stocks that pay solid dividends.
Collecting cash dividends is one of the best ways to offset losses by the broader markets.
And this market correction has driven down the price of many stocks that are still poised to outperform over the long term.
Markets have roared since the Federal Reserve initiated three rate cuts in a row in the final months of 2019.
Great for growth investors, not so much for savers.
And it looks like the Fed might want to keep interest rates lower for longer.
In times like these, many investors look to the top dividend stocks for safety.
Today, we break down the biggest dividend news.
We'll also discuss a new dividend stock on our radar that is now a screaming "Buy."
Dividend investing is a great way for income investors to earn steady income no matter what the market is doing.
But before you go buying just any dividend stock, you'll want to know what kind of dividend it pays.
So what's the difference between cash dividends vs. stocks dividends?
That is what we're showing you today.
We also want to show you our top dividend stock to buy right now-it pays a 7.8% dividend yield, which is more than three times the S&P 500 average.
