Lawrence Carrel

Dividend stock investing may seem daunting, but with a little knowledge of how to find and pick promising dividend-paying stocks, you can invest in these stocks and reap dividends like a pro. Your portfolio will thank you.Researching your dividend stock picks with important formulasAs with all stocks, you should research the dividend stocks you’re considering before you buy them to ensure they’re good investments.

Dividend investing is nothing new. However, following a dividend-investment strategy is new to many modern investors who've been focused solely on growth investing. If you count yourself among this crowd or are just starting out and plan on investing in dividend stocks, you need to know how to develop your strategy, find and evaluate potentially good dividend stocks, manage your portfolio, and avoid the most common and critical mistakes.

Yield (also known as dividend yield) is your dividend’s rate of return, and one of the most important numbers to consider. It enables you to compare stocks side-by-side, ensure that a particular stock meets the minimum return requirement for your portfolio, and avoid stocks that have comparatively high dividends (in dollars) but low returns (in percentage).

Real estate investment trusts, or REITs, provide a way for investors to receive capital appreciation and income from real estate without having to actually purchase and maintain property. It’s like being an owner/landlord without all the hassles and responsibilities that typically accompany those roles. True to their name, REITs are trusts, not corporations.

Investment vehicle is a fancy term used to describe an investment product other than basic stocks or bonds. Sometimes the term "investment vehicle" refers to a product, such as a fund, which holds many different stocks or bonds. Other times, it refers to a way to purchase stocks or bonds other than a straightforward purchase.

Several industrial sectors are filled with dividend-paying companies, and some sectors provide better bets than others for your dividend stock investment portfolio. The following sectors offer the top options for dividend stock investing; when you’re fishing for good dividend stocks, you can improve your chances of hooking some keepers by dropping your line in these holes: Utilities: Electricity, water, and natural gas (suppliers, not producers) Energy: Oil, natural gas (producers, not suppliers), and master limited partnerships (MLPs) Telecommunications: Carriers (U.

Before investing in any dividend stock, you must perform due diligence to ensure it’s a suitable stock for your dividend investing needs. The following checklist helps you ask the right due diligence questions to sift through your stock possibilities: Examine the company’s most recent quarterly statements, including the balance sheet, income statement, and cash flow statement.

Dividend stock companies often give you signs that their outlooks are promising. Although you shouldn’t bank entirely on a stock’s promise, these signs can help you weed out bad-news dividend stocks that don’t belong in your investment portfolio. Rising dividend payments: A long history of rising dividend payments, in good times and bad, generally indicates a stable company.

As with all stocks, you should research the dividend stocks you’re considering before you buy them to ensure they’re good investments. These formulas help you determine whether a stock’s dividend and other markers are sufficient to meet your needs. Check out the company’s balance sheet, income statement, and cash flow statements for the figures you need to crunch the numbers using the following formulas.