Useful Tips for Dividend Investing

What do you know about dividend investing? In these increasingly disruptive times, it won’t be surprising to find big companies standing on shaky ground. If you’re planning to retire soon, you should know that investing in dividend-paying stocks presents its own set of challenges. With the help of experienced financial consultants in 07663, you’ll be able to understand and appreciate the power of dividends.



Dividend Investing: Useful Tips You Should Know


Do Your Due Diligence


If you’re a beginner at investing, resist the urge to go for the highest dividend yield you could find. While you may feel like you’re missing out on a substantial payout, you should know that the fattest yields can be a surefire sign that the company is in trouble. Keep in mind that a dividend yield refers to their yearly dividend payment divided by its current stock price.


When a specific company goes through difficult times, they can reduce their payout. Sometimes, the payout may even be suspended or eliminated. While you may find great opportunities when the yields are high on a few occasions, it’s still best to do your due diligence first before grabbing the biggest dividend yield.


Keep an Eye Out for a Dividend’s Growth Rate


Any financial consultant would tell you that a dividend’s growth rate is extremely important. You can find companies out there that gradually increase their payouts only a little bit each year. Alternatively, other companies are in the middle of their robust yearly increases. It’s best to favor fast-growing dividends because you can expect to collect more from growing dividend payers each year.


Examine the Payout Ratio


If you’re considering a dividend payer, be sure to check their payout ratio. To calculate the payout ratio, simply divide the yearly dividend amount by their annual earnings per share (EPS). A company with a 50% ratio is doing great at maintaining its dividend, and it also shows that the dividend can grow. Conversely, payout ratios that go beyond 100% isn’t a good sign.


A financial expert would advise you to get more details about the company that you’re considering. Remember that each company is unique, and their situation is different.



Where to Find the Best Financial Consultants 07663


Are you looking to find dividend-paying stocks for your portfolio? Don’t just jump into dividends without getting in touch with the best financial consultants at 1879 Advisors today!

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