While many investors rely on share-price gains for profit, they aren't the only way to benefit from the market. Dividend stocks are one of the best ways to turn the stock market into a reliable source of personal income. That's why we're looking at three of the best dividend stocks - one of the market's most reliable sources of wealth-building.
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.
What Are Dividend Stocks?
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.
Why Invest In Dividend Stocks?
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.
Which Dividend Stocks Should I Buy?
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.
- 3 Top Dividend Stocks for Retirees to Buy Now
- This Top REIT Has a 3.3% Dividend Yield and Could Soar Thanks to Amazon
- The Defense Sector Is Full of Dividend Stocks, but These 3 Are the Best
- The 3 Top Dividend Defense Stocks to Buy in 2017
- These Gold Dividend Stocks with the Highest Yields Include One of Our 2017 Picks
- List of Silver Dividend Stocks with the Highest Yields Includes One of Our Top Picks
- 3 Best Dividend Stocks in the Defense Sector to Buy Now
- The Best Dividend Stocks to Buy and Hold Forever
- Buy the Best Dividend Stocks in the Tech Industry, All in One Place
- How to Grab Superior Dividend Returns from Silicon Valley
- These Dividend Aristocrats Are "Kings" of Return
- One of the Most Reliable Dividend Stocks to Buy in 2016
- This Top Dividend Stock to Buy Offers a 4.45% Yearly Return
- The Best Dividend Stock to Buy in This Booming $14.4 Trillion Market
- One of the Best Dividend Stocks to Buy in 2016
- Increase Your Return on Investment with This One Easy Strategy in 2016
Finding reliable retirement income is harder than ever thanks to the Fed's policies, which have led to rock-bottom interest rates. And with stocks trading at all-time highs, even decent dividend income is hard to come by.
For those investors who already have a retirement plan in place and still have extra money to invest, Money Morning has a strategy to supplement your main retirement income.
There's a $1 trillion water infrastructure problem in the United States, which could be exacerbated by a freshwater supply shortage.
But there's one dividend stock that could benefit from what's set to become a full-blown water crisis.
The top dividend stocks for retirees to buy now are the ones that offer passive, extra income.
That's why, today, we're going to show you our five favorite picks.
As it continues to disrupt industries, it's no surprise Amazon is on a long-term track for massive growth.
That's why today we're recommending a high-yielding stock that could also grow alongside Amazon.
The defense sector is full of companies that pay shareholders dividends each quarter.
But there are only three dividend stocks in the sector that we recommend as strong buys to our readers.
Many of the top dividend defense stocks boast strong share-price growth in addition to big dividend yields.
That's why our experts have handpicked three of the best companies to invest in this year.
Despite gold price volatility this year, gold dividend stocks are still worthy investments for your portfolio.
That's why we've compiled a list of the highest-yielding stocks in the gold market right now.
Despite the silver price volatility this year, silver dividend stocks are still worthy investments for your portfolio.
That's why we've compiled a list of the highest-yielding stocks in the silver market right now.
Many defense stocks boasts both strong share-price growth and big dividend yields.
That's why our gurus have handpicked three of the best dividend stocks in the defense sector.
Dividends play a key part in a portfolio's total return and have never been more important than during today's ultra-low interest rate environment.
That's why we're highlighting the three best dividend stocks to buy and hold forever.
The best dividend stocks in 2016 are actually in a surprising sector: tech.
And not only do these tech stocks provide market-beating gains, but they also pay you while they outperform the market.
As recently as 12 years ago, Silicon Valley's tech firms were notorious for being stingy with their dividend payouts. They could always be counted on to plow every last cent of profit back into growth or research or even buybacks, rather than paying their "partners," the shareholders.
Tech was an exciting sector, but income-hungry investors felt their money was treated better elsewhere. Remember, in the 1990s, yield was not the rare, endangered species it is in 2016.
But in 2016, tech has become an economy unto itself. What's more, where U.S. corporations are buried under nearly $30 trillion in debt, my five favorite American tech companies are flush, holding more than $504 billion in cold, hard cash between them. That's 30% of Corporate America's entire hoard.
With profit margins across this "convergence economy" topping a cushy 17.5%, tech is paying well across the board and treating shareholders like the partners they are. The mere median tech payout is well over 2.5%.
Tech is the new home of low-risk income on the markets, and there are nearly 100 dividend payers to choose from among the cream of the crop.
What do you call a dividend aristocrat that has raised its dividend not just 25 straight years, but 50 straight years?
That would be a dividend king. And like other dividend aristocrats, dividend kings deliver outsized returns compared to stocks that don't raise their dividend every year (or pay one at all).
Dividend stocks are one of the best ways to earn stable returns over time.
Investors are increasingly turning to dividends instead of just capital gains to squeeze returns out of their investments.