When you are looking forward to retirement, or simply want secure investments that pay a little money as you go, choosing the best dividend stock is important.

1. Choosing the Best
Dividend Stocks
By
www.ProfitableInvestingTips.com

2. https://profitableinvestingtips.com/stock-
investing/choosing-the-best-dividend-stocks
Dividend stocks are a great way to invest
over the long term. If you are going into
retirement, the dividends are a nice
quarterly source of income. And, as you
prepare for retirement, dividend
reinvestment plans let you roll your
dividends back into more shares of stock
without paying any commissions.

3. https://profitableinvestingtips.com/stock-
investing/choosing-the-best-dividend-stocks
But, not all dividend stocks are created
equal! All too often, companies that are
struggling maintain their dividend. The stock
price is down and the dividend yield is
fantastic.

4. https://profitableinvestingtips.com/stock-
investing/choosing-the-best-dividend-stocks
But, some of these high dividend yields are
dangerous. One day the dividends will
disappear just as the struggling company
goes out of business! Here are a few of our
thoughts on choosing the best dividend
stocks.

5. https://profitableinvestingtips.com/stock-
investing/choosing-the-best-dividend-stocks
O Finding Dividend Stocks to Invest in
O It is easy to find dividend stocks. But,
rather than looking first for stocks on
Yahoo Finance or Google Finance, go to a
site like Dividend.com for a huge list of
dividend stocks and Macy’s on page 22
paying a 9% + dividend.

6. https://profitableinvestingtips.com/stock-
investing/choosing-the-best-dividend-stocks
They are preceded by stocks that pay for
more than 100% of the share price. When
you see a stock like Macy’s that is having
trouble competing in the brave new world of
online sales and Amazon.com, you can
understand why they are keeping their
dividend up to attract investors even as
sales and income fall.

7. https://profitableinvestingtips.com/stock-
investing/choosing-the-best-dividend-stocks
But, when a company is listed as paying
more than the share price, something is
drastically wrong. You should think twice
before buying Macy’s for the dividend but
when you see stocks with ridiculously high
dividends, it is time to run and hide! So, how
do you go about choosing the best dividend
stocks that reward you for investing while
also being safe over the long term?

8. https://profitableinvestingtips.com/stock-
investing/choosing-the-best-dividend-stocks
O Choosing the Best Dividend Stocks
O There are just a few rules to follow in
order to find the “goldilocks” group of
dividend stocks that provide excellent
returns and are secure over time. The
process looks a lot like assessing intrinsic
stock value when investing in stocks.

9. https://profitableinvestingtips.com/stock-
investing/choosing-the-best-dividend-stocks
O Investing in Dividend Stocks with a Large
Margin of Safety
O Some refer to this a looking for a strong
operating mote. Whether this is a “high cost of
entry” business like a natural gas pipeline that
has overcome numerous obstacles to get
built, a utility that is licensed to serve a
specific region, or a world famous trade name
like Coca Cola, companies that these
competitive advantages are likely to be secure
investments and dividend cash cows for year
and years.

10. https://profitableinvestingtips.com/stock-
investing/choosing-the-best-dividend-stocks
O When Investing, Stay with Dividend Yields
That Match Those of the Competition
O This gets back to the business of avoiding
companies that are struggling and don’t want
to reduce their dividend for fear that it will alert
investors as to their dire straits. A healthy
business in any given sector will typically pay
dividends in a given range. When the dividend
is higher or lower than expected, you need to
check that out before investing.

11. https://profitableinvestingtips.com/stock-
investing/choosing-the-best-dividend-stocks
O Understand and Check Out the Payout
Ratio before Investing
O This is similar to being leery of too-high
dividends. A company will typically pay out
a set portion of its income in dividends
every year. The dividend goes up as they
make more money and the dividend
should go down when they go through
difficult times.

12. https://profitableinvestingtips.com/stock-
investing/choosing-the-best-dividend-stocks
The market may not have caught on that a
company is having trouble or doing better
than expected, but if you follow their payout
ratio, you will have a good idea. Then you
can make an intelligent decision to buy
more of the stock, hold what you have, or
sell before the bottom falls out. Likewise, if
you are putting your money in a stock and
want to sleep well at night, you want a
company whose balance sheet is healthy.

13. https://profitableinvestingtips.com/stock-
investing/choosing-the-best-dividend-stocks
O Investing Companies with Increasing
Dividends
O Companies that have been paying in
dividends for decades or even more than a
century have typically been increasing their
dividend over the years. This is a sign of a
healthy business, a good margin of safety,
and intrinsic stock value. Picking stocks
whose business plans you understand and
who dividends go up every few years is a
good way of choosing the best dividend
stocks without spending too much time
looking at the details!

14. https://profitableinvestingtips.com/stock-
investing/choosing-the-best-dividend-stocks
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