Lawrence Carrel

Dividend stock investing may seem daunting, but with a little knowledge of how to find and pick promising dividend-paying stocks, you can invest in these stocks and reap dividends like a pro. Your portfolio will thank you.Researching your dividend stock picks with important formulasAs with all stocks, you should research the dividend stocks you’re considering before you buy them to ensure they’re good investments.

Dividend investing is nothing new. However, following a dividend-investment strategy is new to many modern investors who've been focused solely on growth investing. If you count yourself among this crowd or are just starting out and plan on investing in dividend stocks, you need to know how to develop your strategy, find and evaluate potentially good dividend stocks, manage your portfolio, and avoid the most common and critical mistakes.

Everyone knows you can buy and sell shares of stock on the stock market. Some investors, however, don’t realize the nuances of the different buy and sell orders — market orders, time orders, limit orders, stop-loss orders, and so on. By understanding these different types of orders and using them correctly, you can maximize your dividend profits and minimize your potential losses.

Yield (also known as dividend yield) is your dividend’s rate of return, and one of the most important numbers to consider. It enables you to compare stocks side-by-side, ensure that a particular stock meets the minimum return requirement for your portfolio, and avoid stocks that have comparatively high dividends (in dollars) but low returns (in percentage).

The key to value investing is to follow a less biased and less emotional approach in estimating the true value of a stock. There are two schools of thought that attempt to do just that: Efficient Market Theory and Fundamental Analysis. Efficient Market Theory According to Efficient Market Theory, the stock market is an efficient marketplace where a stock’s price reflects its true value at all times.

A Real Estate Investment Trusts (REIT) that pays a sizeable dividend and has a solid cash flow isn’t a sure thing, but it’s certainly worthy of consideration when you're looking to buy new stocks. When you buy a REIT, you’re becoming more of a real estate investor than a dividend stock investor, and such a move carries both advantages and disadvantages.

Among stock investors, income and dividend investing are one and the same; the income investing approach encourages you to buy investments, such as stocks or bonds, that promise a steady stream of income. For most of history, investing was income investing. Whether investing in stocks or bonds, in small or large businesses, investors needed income from their investments to cover their daily expenses.

Several industrial sectors are filled with dividend-paying companies, and some sectors provide better bets than others for your dividend stock investment portfolio. The following sectors offer the top options for dividend stock investing; when you’re fishing for good dividend stocks, you can improve your chances of hooking some keepers by dropping your line in these holes: Utilities: Electricity, water, and natural gas (suppliers, not producers) Energy: Oil, natural gas (producers, not suppliers), and master limited partnerships (MLPs) Telecommunications: Carriers (U.

Before investing in any dividend stock, you must perform due diligence to ensure it’s a suitable stock for your dividend investing needs. The following checklist helps you ask the right due diligence questions to sift through your stock possibilities: Examine the company’s most recent quarterly statements, including the balance sheet, income statement, and cash flow statement.