Dividend Investing In a Bull Market

What makes a dividend stock tick? A high payout, or consistency? If you picked consistency, congratulations. You are likely to make yourself quite rich using a dividend strategy. No matter how blue your blue chip, it can go bankrupt. Dividends can be cut. You might lose everything. So what can you do about that? Given the bond market’s continuing, powerful rally, one might conclude that the reasonable course is to suck it up and buy bonds. But there is a way to balance your relative risk, by closely considering your dividend stock selections. Here are two important questions to yourself when looking at potential dividend picks:

Question No. 1: Is the company able to pay its dividend consistently? One way to check this is to look at the Standard & Poor’s Dividend Aristocrats list. All of those stocks have increased their dividend payouts for at least 25 consecutive years. They might not pay a dividend that will knock your socks off, but these are the companies that clearly have dividend consistency as corporate policy. Question No. 2: Would I buy more if the price fell? This is crucial. If you are investing for appreciation alone, you are perhaps missing the point of dividend investing.

Source: NewsMax

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