Some people buy stocks so they can sell them for a profit, while others buy stocks to make a regular income off the dividends. The key to any successful portfolio is to have a plan and determine, from the beginning, if you are a securities flipper, or if you want a regular income. If your decision it to get paid for your investments, then you will need to know how to find the top dividend paying stocks.
Check For The Companies That Love Paying Dividends
One of the most basic pieces of advice when it comes to finding the top dividend paying stocks is to look for the companies that pride themselves on paying their investors. When you are researching a company, look at the company’s press release history to see how many titles talk about paying dividends. If a company has a long and proud history of paying out dividends to its investors, then that is a company you want to do business with.
Look At The Offering
When Mr. Burns from “The Simpsons” was reviewing his investment portfolio, he was shocked to hear that Amalgamated Spats had gone out of business. Since no one has worn spats since the turn of the 20th century, it is easy to see why this company went out of business.
In choosing your dividend paying companies, always look for companies with a product line that has long-term durability. Companies that make food, cars, and handheld electronics have a much more durable product line than a company set up to manufacturer information on the latest diet fad. Always choose companies that have a long history of success, and products that will be around for a long time.
Check The Ratio Of Assets To Liabilities
Companies that can maintain a strong ratio of assets to liabilities will always be able to pay a dividend. If a company can maintain an asset to liability ratio of greater than one, then that is a company you want to invest in.
Look At The Payout Per Share
Does the company you are looking at have a history of paying out more in dividends than it is generating in revenue per share? In the short-term, this is not always a red flag. Sometimes a company makes adjustments that pay a dividend which is higher than earnings. But if a company has a long history of paying out more than it makes, then it is only a matter of time before that company is going to either go out of business, or stop paying a dividend.
Does The Company Do Buybacks On A Regular Basis?
Companies that offer dividends and buy back stocks on a regular basis are companies that have a stable earnings history and good management. When a stock regularly appreciates so much that the company is able to do a buyback, then you want to be part of that action.
Know The Company You Are Investing In
If you want to find a stock that always pays a dividend, then do some research on the people who run the company. How has management reacted to issues in the past? Does management look to stabilize the company and create a long-term solution, or does it often panic and start putting out more low-value securities to try and raise cash?
The management practices of a company will dictate whether or not the company is able to consistently pay out a dividend. Before you put your money into a company, take a look at its history and see if you feel comfortable with the way the company has done business in the past.
Create A Diversified Portfolio
The best way to make money in stock investing is diversification. You may like the dividends that get paid from the technology sector, but putting all of your cash into those businesses can mean that you get nothing if the technology bubble bursts.
To keep that dividend income rolling in, make sure that you diversify your portfolio and invest in many different kinds of companies. The end result will be a very resilient investing portfolio that will always be able to generate you an income.