Best Dividend Stocks | High Yield Investments (Top 10 included)
Anyone doing a little bit of research about long-term strategies will come across dividend collecting investment strategies – sooner rather than later. Of course there is no one and only dividend strategy valid for every potential investor. But what they all have in common is the methods of generating income by dividends. The article Best Dividend Stocks To Buy Now sets out to show why so many investors still rely on dividend strategies and explains the advantages and disadvantages of relying on dividends.
Besides, we‘ll discuss if dividend stocks are suitable for long-term capital building and making serious profits.
Read on to find out if this would suit you!
The Ultimate Guide For Your Investment Strategy - One of the most common long-term investment strategies reviewed
The Concept of Dividend Strategies
As already mentioned above, there is a plethora of ways to trade or invest using dividend stocks. Since not every stock or every company pays dividends, there are some restrictions about the investment strategies applied.
This often enough results in a strategy mix actually applied by most investors we will talk about.
Many successful investors manage to generate significant income, with most of it coming out of dividends.
Since the 401k supports and rewards strategies more or less built on dividends, more and more non-institutional investors put their savings into dividend stocks, considering these a reliable part of their retirement plan.
It’s all about consistency
The basic idea is to choose a reasonable amount of stocks that pay dividends to the owner regularly.
Most common periods of time are annual, semi-annual or quarterly, with a few companies paying monthly dividends. Thus shareholders participate directly in the company‘s revenue, with additional income out of just holding the shares. And this is the main attraction of dividend stocks – once chosen, they generate income. No need to trade, no need to do anything at all.
Of course this doesn’t imply that dividend strategies are something like the holy grail, a kind of money making mechanism that works while the owner can relax in the sun. Nevertheless the ease of generating income using dividends is very attractive.
While other strategies often enough carry hidden risks, resulting in substantial losses, dividend strategies thrive or fail depending on the choice of stocks. And yes, there are methods to tell the good ones from the bad ones.
Two Key Factors About Best Dividend Paying Stocks
The two crucial factors about dividends are the actual dividend yield (calculated on an annual basis) and the consistency of the yield and the dividends themselves. Needless to say only stocks that pay consistent dividends are suitable for a solid long-term strategy.
Now it should be noticed that dividend stocks and the related investment strategies are valuable for long-term investors. They are useless for daytraders scalping the market for a few pips.
Dividend stocks can be compared to cruise ships, as opposed to the speedboats of day trading. Usually dividend strategies work along the lines of buy-and-hold.
How Important Is The Ex Dividend Date?
The ex dividend date is the very latest day on which the owner must own the share in his portfolio to be entitled to the upcoming dividend.
All subsequent purchases of the share will not be taken into account at the next due distribution date. With the distribution passed, the price of the stock will be lowered about the amount of the dividend paid.
However, this is not a loss, since the owner is being paid the full dividend and the price of the share is just being adjusted, often enough even to increase again very soon.
Dividends make up around 40% of the revenue in mixed stocks altogether - regarding the performance index of the S&P 500.
You can research the Dividend ExDate using the Dividend Calender at TheStreet.com
Calculating exclusive and inclusive dividend payments – and presuming that those are reinvested – there is a considerable edge in concentrating on frequent dividend collection. So that leads immediately to the following question.
Are dividend stocks superior to other strategies in the long-term view?
To begin with, every stock is meant to increase in value over the time of the investment. Thus there are plenty of highly valuable stocks that actually don‘t pay any dividend.
Dividends consist of the revenue a company has made that is partially distributed to the shareholders at the end of the designated period. Of course, non-dividend companies are generating revenue as well, they simply add it to the value of the shares.
And yet, dividends have the advantage it is easier to live off the regular payments than to sell a bundle of stocks every once in a while.
This distinguishes the investor from the trader. A dividend investor is less concerned with market timing, prefering to focus on buy-and-hold.
While there is no guarantee on consistently paid dividends, this risk may be tackled by choosing stocks reasonably diversified regarding companies, sectors and regions.
Besides, reinvesting dividends will accumulate interest, another advantage in the long run.
History is in favor of dividend stocks
Arguably the accumulated revenue of non-dividend stocks, too, ultimately generates payoff. That‘s quite correct. But historical comparison of those two strategies (Referring to the S&P 500 Index, comparing average stock prices to the dividend yield on an annual basis since 1999) shows that the consistency of the dividend yield is much more stable than the actual price of the stock.
This makes the long-term revenue much more stable than just relying on buy-and-sell prices – but here, of course, it boils down to individual preferences: to each his own.
Suitable Stocks And How To Find Them
As promised, here‘s a selection of good-quality dividend stocks. As with every investment strategy, picking the right assets is crucial. Analyzing some basic values to the paper can help separate the best ones from the rest.
Heading for the already mentioned main factors yield and consistency is one of the best ways to select stocks suitable for a good dividend-related portfolio. Therefore it‘s essential to analyze the past dividend history of the stocks in question. Here are some examples:
Stock Symbol (Name)
Approx. Dividend Yield
T (AT&T Inc.)
PG (Procter and Gamble)
MMLP (Martin Midstream Partners L.P.
* Dividend consistency means that either the dividend yield stays more or less the same for a given period, or even increases. Companies with proven consistency in their dividends are often called ‘dividend aristocrats‘ - they do not skip dividend payments, they either raise their dividends or keep them at a completely stable level.
The above-listed AT&T, to name an example, have not decreased their dividend in more than 34 years by 2018. Quite the contrary, they have consistently raised their payments at a stable growth of value per share.
High dividend stocks often have to struggle to keep their high yields long term, and often decrease their payments drastically very soon. Prominent examples are master limited partnerships, real estate investment trusts and every leveraged-yielding setup.
Summary And Pro Recommendations On How To Research the Best Dividend Stocks To Buy Now
It is perfectly alright to have a few high yield stocks included in a portfolio for boosting the total dividend yield.
But one should be aware of the fact that there is a risk of floating all too suddenly, so no one should rely on a stable 14-to-20 % annual yield and a consistent related growth in value per share.
Companies increasing their dividend annually will pay off in the end by a really high yield, calculated on the basis of the entrance. The longer one holds them and collects yield, the higher the ultimate payoff.
A pro’s recommendation would be to scan indizes consisting of dividend stocks, such as
A very comfortable way to scan an index is just getting a list of the included positions and buying the best stocks out of it. There are many ways to invest directly in an index, for example by means of ETFs.
An ETF, short for exchange traded fund, deals with the matter of diversification and contains the best dividend stocks the index can provide and meeting the requirements.
If there‘s for example the requirement of a 20-year consistent history of dividend payments, one may be sure, that the index will only contain stocks meeting those demands, thanks to an at least annual re-balancing of the assets.
Dividend investment is still a good option for growing capital and earning serious money at the stock market – especially for investors content with long-term schemes like pension plans etc., in short, people who don‘t really want to go into trading.
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The Top 10 by Index Weight
Tanger Factory Outlet Centers
Realty Income Corp.
National Retail Properties Inc.
Intl Business Machines Corp
People's United Financial Inc
Old Republic Intl Corp
Exxon Mobil Corp