Want to Become a Better Dividend Investor? Follow These 5 Tips

In 2021, U.S. stocks have rallied hard and they have rallied fast, with the Dow, the S&P 500, and the Nasdaq each looking to notch another double-digit gain for the year. While we can’t predict what the market will do tomorrow, we can try our best to hedge against broader economic risks by investing in quality dividend-paying stocks. But how do you find them?

First, you should pinpoint what, exactly, you’re investing for. Is it for retirement, long-term savings, starting a new business, or general wealth building? Once you have that locked down, you can start filtering for top performing dividend stocks. As for fundamentals, there are key metrics that income investors should pay attention to. Dividend investors should also look at what’s known as the “payout ratio.” Looking at a company’s annualized dividend growth rate, as well as its average annual dividend increase over a five-year period. You can also check out the list of companies known as the Dividend Aristocrats for portfolio inspiration. When looking for dividend stocks, always remember this: companies aren’t obligated to pay dividends, and if a company cuts its dividend, that’s when you know there’s trouble on the horizon.

Source: Zack's

Related Articles:

- Rising Dividends = Rising Returns

- 4 Higher-Yielding Consumer Stocks With A History of Rising Dividends

- The Most Dangerous Investment

- Are Defense Stocks Good Defensive Stocks?

- Hey, You Invest Like a Girl!