Consider owning a diversified portfolio of stocks that pays you to invest, in the shape of dividends. Do you own a charge card? Well you then probably know the way fast interest expense can accumulate, becoming an economic nightmare. The alternative does work with dividend investing and how quickly your dividend income could add up. Even better, when dividend paying companies you own increase their dividend payouts, your income increases! There are lots of questions to ask when purchasing dividend paying stocks some which are:
The length of time has the organization paid dividends ? (Check the dividend yield and history)
You can find amazing dividend paying companies such as Colgate Palmolive (NY:CL) (yield 2.0%) which have paid dividends each year since 1895 or Proctor & Gamble (NY:PG) (yield 1.9%) since 1891. These tremendous dividend histories confirm the businesses’commitment to paying dividends. Normally dividend histories of 5 to 10 years plus are thought good.
Will be the dividends sustainable ? (Check the dividend payout ratio)
You can find companies which have good dividend payout ratios like 3M (NY:MMM) which pays out 40% or Johnson & Johnson (NY:JNJ) which currently pays out 38%. The payout ratio is really a tool that helps investors determine if the organization has sufficient funds for maintaining dividend payouts. Normally a payout ratio below 70% is acceptable.
Will be the dividends growing ? (Check the dividend growth rate)
You can find companies, such as Sysco (NY:SYY) which have raised its dividends by over 400% through the 10 year period from 1995 to 2005 calendário. Sterling Bancorp (NY:STL) raised its dividends over 500% during exactly the same 10 year period! Normally dividend increases that exceed inflation are thought good.
A potential investing strategy is to buy a diversified basket of top quality dividend payers which consistently raise their dividends. Reinvest the dividend income you receive to buy more shares and repeat the cycle to produce your own dividend compounding money machine.
DividendInvestor.com provides investors worldwide with the fundamental proprietary mining tools to screen stocks by dividend yields, payout ratios, growth rates, histories and additional criteria. Visit now so you can start to identify your own diversified basket of dividend winners!