How Do You Pick High Paying Dividend Stocks?
Dividend paying stocks are one of Wall Street’s hidden gems. They are generally considered an investment for older, retirement minded investors, but they can also provide a substantial boost to any portfolio if chosen correctly. Step 1 Begin by screening the stock market as a whole for stocks that pay a dividend. A free stock screener can be accessed at MSN Money, or if you have an online brokerage account, it’s very likely you have one available for use there. Step 2 Input several variables that are important to you. For my own portfolio, I would choose: 1) a dividend yield greater than 5.0%; 2) a P/E ratio as low as possible; 3) a company with EPS growth estimates faster than industry competitors; 4) a debt to equity ratio lower than industry average. Step 3 Review the results, and beware of companies paying a dividend higher than 7%. Some stocks are Real Estate Investment Trusts (REITs), which are required to pay high dividends, or various natural resource trusts that pay similarly
Dividend paying stocks can be a useful portion of a portfolio to enhance returns through income and diversification. Finding high dividend paying stocks is one thing, but determining which one to pick is another. Use the tips below to find and create a list of high dividend paying stocks. Understand how dividend yield is calculated. Dividend yield is calculated by taking the per share dividend amount and dividing it by the current price. For example, most detailed quotes pages will list the dividend. On Yahoo Finance, look up symbol DSU. On the quote page you can see the dividend (as of March 29, 2008) is $0.64. The current price is $5.14. So the dividend yield is 12.45% (.64 divided by 5.14). Determine if the dividend will continue to be paid in the future: look at historical dividends. For example, go to Morningstar.com. Pull up a quote in PCU. Scroll down the right-hand side of the page and click Dividends & Returns. Scroll down this page, and you can view the history of the dividen
