Profiting From Dividend Stocks

Let’s talk about dividend stocks. They’re reliable. They return cash. And if you choose to reinvest, they can lead to exponential growth. Yet dividend investing is a tricky business. Higher, for example, isn’t always better. It's easy to find plenty of dividend stocks that pay rather high percentages. The catch? These yield percentages are calculated on the last distribution amount divided by the current stock price.

Sustainability is what I’m emphasizing here. You’ll find that quality among 54 stocks in the Standard & Poor’s 500 Index, commonly called the “Dividend Aristocrats.” What makes these companies special? They've been able to increase their dividends every year for twenty five years. In other words, they’re about as safe as you can get. But you need to remember that a higher dividend payoff means lower capital for the company. And capital protection is important because these companies are often less vulnerable to market corrections, allowing them to present the opportunity of a steady income source.

Source: Wealth Daily

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