Dividend Investing: Step-by-Step Guide for Beginners to Create a Passive Income and Find your Way to Financial Freedom Through Dividend and Stocks Investments by Evans George & Rogers William

Author:Evans, George & Rogers, William [Evans, George]
Language: eng
Format: epub
Published: 2019-11-20T16:00:00+00:00

Additional Attributes to Consider When Selecting Dividend Stocks

The attributes we've discussed are important when considering an investment in any stock. But the dividend investor has more work to do. The following attributes pertain directly to stocks that pay dividends.

Dividend Yield

This is the dividend payment measured as a percent of the stock price. If a stock sells for $5.00, and the company distributes quarterly dividends of $0.05, then the dividend yield is 4% (0.05 x 4 / 5 = 0.04). The yield is expressed in terms of total annual payments, but most companies distribute their dividends quarterly. As dividend investors, we are attracted to a high yield, but we know that it's dangerous to chase after the wrong investment just because we like the distribution. As discussed with the Dividend Aristocrats, a long-term investor should be attracted to a stock with a sustainable dividend that increases over time. The yield on the current stock price is only a consideration that new investors make. The yield on the price initially paid for the stock becomes increasingly more important as new investors evolve into long-term holders.

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