Best dividend stocks
The best dividend stocks out their are the ones that yield 3%+, increase their dividend payout each year, and have paid dividends quarterly for a long period of time.
The 3% criteria is self explanatory. On a 1,000 dollar investment you will get 30 dollars back in dividends a year, which is pretty solid. Anything more than 3% is gravy. You do not want to invest in companies that payout a 8+% dividend yield. That usually means that there is something fishy with the company or that the dividend they are paying out is unsustainable. Citigroup was paying out over 10% after their stock price crashed and many flocked to buy the “deal”, the dividend was cut before the next payout and many investors lost most of their money in that investment.
You must insist on investing in a company that grows its dividend on a regular investment. Let’s say you buy stock in company XYZ that yields out 3%. After ten years company XYZ doubles in price, which is an about average return. If the company is still yielding 3% you are actually getting a 6% dividend off of your original investment. That is one of the many beauties of buy and hold DRIP investing.
Insisting that a company has a long track record of paying out dividends is also self explanatory. Do you think that Johnson and Johnson is going to go out of business or cut its dividend? Absolutely not they are a solid company that has been generating profits and paying out dividends to its shareholders for about one hundred years!