3 Tips for Successful Dividend Investing

Many people are looking for the perfect formula to help them figure out how to invest successfully. However, there is no one magic formula that can guarantee adequate stock returns. Instead, it requires planning and effort to successfully build up your dividend portfolio. While there are many things that you can do to improve your results with dividend investing, here are 3 tips that I’ve found especially helpful when it comes to choosing good stocks for your dividend portfolio:

1. Get Educated

Learn about dividend stocks. Learn about how they work, and learn about how to evaluate yield. Find out more about what makes a quality dividend stock, and how to determine which stocks are more likely to help you meet your goals. Educate yourself about companies you are interested in, and familiarize yourself with terms common to investing and dividend investing. Learning how to choose dividend stocks, and understanding how money and investing work, can go a long way toward helping you find success as a dividend investor.

2. Focus on High Quality Stocks

Instead of looking only at dividend yield, consider looking at other factors that make a high quality stock. Look at companies that have a long history of stable growth, and that pay out dividends regularly. Dividend aristocrats are generally good choices, and show high quality. Companies that are cash rich can also be good choices, since it usually indicates that they are doing something right – especially when they use some of that cash to reward shareholders by paying dividends.

3. Make a Plan and Stick With It

You are much more likely to do well when you create a dividend investing plan and then stick with it. Think about your long term and short term goals, and determine which dividend stocks might be able to help you reach those goals. If you are educated about your options, and if you focus on high quality stocks, you should be able to create a plan to fit your needs. After that, you will need to stick with your plan. When you get too emotional, or sell at the first sign of economic trouble, you could upset your long term goals. If you have a good plan, make an effort to stick with it. While you might need to reconsider some of your investments if something changes fundamentally about a dividend stock, but, overall, it’s a good idea to stick with your plan.

1 reply
  1. Dividend Mantra
    Dividend Mantra says:

    Great steps, and they are all in order. Education yourself should always come first before you invest a dime. From there, you get your feet wet and stick with the plan through highs and lows.

    Good stuff!

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