Not sure what dividend stocks are or how to invest in them? You’ll want to keep reading before you make a mistake.
Things To Consider While Buying Dividend Stocks
Though, not all dividend paying securities are created equally. There are several considerations to take care of.
For any long term investment horizon for instance say ten years, the best investment to make will not be bonds, stocks, mutual funds, but high quality of dividend stocks. Below mentioned are the 5 dividend stocks buy steps to achieve the best and long term results.
Know The Fundamentals
While buying the dividend stocks you need to know that they are of high quality which means they assure you the dividend will last for the longer period of time and grows with a satisfactory growing rate. The dividend stocks returns works in this manner i.e. share price growth + dividend yield = stock returns.
Begin With The Candidate Stocks
With thousands of stocks listed, all you need to do is narrow down to the manageable ones. For this you can use an online screener that will show you the results of those dividends that yields you with more returns. Also, go for those dividend stocks that hold a good history of raising the dividends.
Investigate Before Investing
Use online resources to find out the financial status of the company. It is important to know the history of it and then you proceed with investing in it. If the company isn’t showing the growth history in last ten years then do not go further. This means the stocks doesn’t have an ability to demonstrate the earnings and it is risky to invest further.
Insist On The Fiscal Strength
Before investing look out for the balance sheet of the company as well as the white papers. Follow the below mentioned key measurements of its fiscal strength such as:
• High coverage of interest
• Low debt to equity ratio
• No listing of the preferred stocks on the balance sheet
The Interest Rate Should Be At Least 5% Hiked In The Last Five Years
This is very much important, since you are considering investing in dividend. The stocks that you have shortlisted should provide you with a safety margin. Anything that yields you 30% or more is a good example of an unsustainable growth.
Follow these above mentioned the steps to 5 dividend stocks buy that will secure your hard earned money in a secured way.