Buying Dividend Paying Stocks
The following is a guest post written by one of our readers and friends, Bryan Postern.
There are many advantages to investing in dividend stocks. Most dividend paying stocks outperform those that do not pay dividends in both the short and the long term. Besides the obvious advantage of getting better returns over time, there are several “hidden advantages” to investing in dividend paying companies.
An investor focused on putting his or her money into top dividend stocks needs to do a sufficient amount of research. They should make sure that the company is profitable, that the dividend yield is significant [over 2%], that the dividend has been increased over time, and that the company is poised to grow and become more profitable each and every year. After the initial purchase however, things should be on autopilot for the most part.
Dividend investing is not about trading and trying to make a quick buck; it is about buying and holding for as long as you can. You should still monitor your investments and make sure that the companies you are investing in are still doing well, but the work involved in dividend investing does not even compare to other types of investing. When you are investing in dividend paying companies and you plan on buying and holding for the long term, you only need to be correct once, in which company/companies you buy. When you are trading or at least more active in trading, you need to be right three different times to be profitable. You need to be correct in your assumptions of what company to buy, when to buy it, and when to sell it. I do not know about you but it is hard enough for me to be correct once, let alone three different times. If professionals have a hard time profiting from rapidly buying and selling companies with little rhyme or reason, what makes you think that you would be successful in doing so? Warren Buffet did not make 40+ billion dollars from investing in companies he knew little about and then quickly selling them. Buffet buys a stake in a company and expects to hold the company for decades, not days, weeks, months, or even years.
There are less low points in dividend investing. This is a documented fact. You will not completely avoid recessions, depressions, or simple downturns in the market by investing in dividend paying companies, but you will experience higher and less “lows”. Dividend paying companies are much more stable then companies that do not pay out dividends for several reasons. Dividend paying companies tend to be profitable and they tend to trade at lower valuations. Also investors do not put their money into dividend paying companies with the intention of selling the next day, they buy and hold these companies for the most part.
There is simply much less risk involved in dividend investing. Not only will you get better returns in the long run, your portfolio will be more stable and you will not have to do nearly as much work. It’s a no brainer
© 2010 Buy Stocks OnlineGet Your Free Stock Market Tips
Tags: Dividend, dividend paying companies, dividend yield, dividends, dow, Equities, ING, Investing, Investment, investments, investor, investors, Stock, stocks, Stocks and Bonds, top dividend stocks
Related posts
Filed Under Buy Stocks Online | Leave a Comment
Comments
Leave a Reply
3 Tips For Buying Stocks
Last six articles submitted
Posts Of Interest
Stock Market Topics
Recent Visitor Activity
- beauty: Nowadays especially the economy is not so good investing your money might be a little bit risky. That’s...
- cvsrkmeher: I been in the stock market for over a decade now and been through many up’s down’s of stock...
- Balachandar: Good knowledge about the company is required to gamble with equity.Do a complete research about the...
- Amrit Sukhani: It is extremely important to understand the performance of the particular stock vis-à-vis the...
- Vikrant: Today’s online stock trading websites enable you to buy and trade stocks without middleman. But if you...
