(Hint: You can’t just look at dividend yield alone!)
As investors, we all love dividends. Other than the thrill of seeing a stock you own rise higher and higher in the stock market, receiving passive dividend income from your investments every year is something we all look forward to.
So if you’re more of an income investor and looking to invest for dividends, your stock portfolio will be markedly different from someone who’s investing for high growth and capital gain. The stocks that will give good, consistent dividends may not necessarily be the kind that will grow by 20-50% a year and vice versa.
So if you investing for dividends, you have to invest accordingly and only pick the best stocks that will give the passive dividend income you want. The question is: How?
So if you’re slightly lost and looking for some direction, here are 7 quick steps to help you pick the best dividend stocks around:
- Look for Mid-Large Cap Stocks
- Dividend Payout Ratio is 50% or More
- Track Record of Paying Consistent Dividends
- Company’s Fundamentals Must Be Sustainable
- Company has Low CAPEX
- Company has Stable Free Cash Flow
- Yield Must Beat Risk-Free Rate
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