Dividend Investing: 5 Important Things to Consider

Contemplating a foray into dividend investing? Consider the following before dipping your toes into the dividend pool. 1. Dividends are one tool for accumulating wealth Yes, dividends are an excellent income growth tool. However, so is stock price appreciation. I sold my Starbucks (NASDAQ: SBUX) shares years ago when the stock price was $24. As of this writing, Starbucks shares are $75.01. 2. Look at dividend history - Canadian Utilities’ (TSX: CU) annual dividend per share has increased for 42 consecutive years.

3. Understand that dividends are a safety net against share price fluctuation - If you own shares in a quality dividend-paying company with excellent growth potential, dividends should continue to flow into your trading account despite share price volatility. 4. It’s not always about monster yields - John Heinzl, a dividend investor for Globe Investor’s Strategy Lab said last week, “Many investors make the mistake of looking at the high yield alone, which can set them up for disappointment if the company hits a pothole and has to cut its dividend.” 5. Be a dividend diversifier - This is simple enough, as many like to diversify their portfolios in general. Make sure your dividend stocks are spread across a variety of sectors.

Source: Motley Fool

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