The Successful Investor’s Guide to Dividend Investing
Investing in dividend-paying stocks can be a savvy way for you to build long-term wealth. Dividends provide you with a steady stream of income, and over time, the power of compounding can turn these payouts into a sizable cash flow. However, not all dividend stocks are created equal. To successfully invest in dividend-paying stocks, you need to know what to look for.
How Dividend Stocks Work
Dividend-paying stocks are a powerful tool in any investor’s portfolio. These stocks provide a steady stream of income through regular dividend payments, offering a reliable source of returns beyond capital appreciation.
At their core, dividend-paying stocks represent your ownership in companies that choose to distribute a portion of their profits directly to you and other shareholders. This dividend payment is typically made on a quarterly basis, although some companies pay monthly dividends, providing you with a tangible return on your investment beyond capital appreciation.
What to Consider When Looking for Dividend-Paying Stocks
Companies That Have a Proven Track Record
First and foremost, focus on companies with a proven track record of consistently increasing their dividends year after year. This dividend growth is a sign of financial strength and stability — qualities you want in any investment.
Payout Ratios
It is also important to consider the payout ratio, which is the percentage of a company’s earnings that are distributed to shareholders in the form of dividends. A lower payout ratio indicates that the company has the potential to increase its dividend in the future.
Avoid the Highest-Yield
Some dividend-paying stocks have high yields due to the market not recognizing the full value of the stock. However, an unusually high dividend yield can also indicate underlying business challenges.
Invest in Dividend-Paying Stocks with Bloom
Our team at Bloom understands the importance of including dividend-paying stocks in your portfolio. We have specialized in investing in income-generating investments, specifically dividend-paying stocks, for over 25 years. These investments can help you generate income as needed and provide growth from the stock market.
If you are looking for a personal investment management service that can help you generate income and growth contact us today. Call us at +1–416–861–9941 or email us at info@bloominvestmentcounsel.com.
This content is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this content should consult with his or her financial partner or advisor.