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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 Online
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Buy Stocks Online: Scottrade

Please note: This is a review of the online brokerage firm, Scottrade and their website. It was written by B. Wayland, one of our new readers.

Scottrade is one of the many available companies through which individual investors can invest in the stock market online. The Scottrade platform offers a number of advantages for investors including the opportunity to invest not just in stocks but also, mutual funds, options, bonds, and certificates of deposit. Additionally, their research tools offer comprehensive reviews of the stocks, mutual funds, exchange-traded funds, CDs, and bonds. Furthermore, their $7 flat fee for all trades presents a low entry fee compared to other investment fees.

Upon login, the investor’s homepage shows a summary of buying power depending on whether your account is a margin or non-margin account. This is followed by the total money balance available, equivalent to cash that can be withdrawn and the total account value, equivalent to the value of stocks and cash combined. Other available information include open and completed orders, positions, and a watchlist. Across the top of the homepage are tabs which allow the investor to quickly switch to trading, account details, quotes and research, and Scottrade’s Knowledge Center. The Knowledge Center provides investment education, information about Scottrade live events, and even a dictionary of investment terms.

Actually buying stocks is a simple process with additional options as to the type of order, including market, limit, stop, stop limit, and trailing stop orders. International investors also have access to a number of foreign markets. For newer investors, Scottrade offers links to investment basics based on the type of security to be invested in. Furthermore, a quick stock quote and an overview of the three US indices is always available no matter which page the investor is on. Scottrade’s stock research platform provides comprehensive information on any publicly listed company. An initial search for a stock will pull up a summary of the stock, including price to earnings ratios, earnings per share, volatility, and betas. More detailed information is further divided into additional tabs that include the most recent news, charts, options being traded for that stock, fundamentals such as profitability, valuation, and financial strength, trades made by company insiders, earnings, financial reports, and any SEC filings the company makes.

For those who are unsure of where to start when it comes to choosing stocks to buy, the stock screener provides matches based on market segment, price performance, fundamentals, and earnings and dividends. One of Scottrade’s strong points is its low price point for trading. With a flat fee of $7 for each trade, the cost of trading is greatly reduced. This is particularly beneficial for those investors looking to diversify without a ton of money to invest. The minimum initial deposit of $500 also offers cash poor investors a chance to get their feet wet.

Depositing money into a Scottrade account can be done easily through the Money Direct option in which an ACH transfer can be made directly from a bank account. Withdrawing the money is simple enough as well. By calling one of Scottrade’s 483 local offices, a withdrawal can be made with a check sent out in the mail within one business day.

Overall, Scottrade is an excellent trading platform for new and experienced investors. It provides a simple interface with detailed information when necessary. All research can be done in one location with a tremendous amount of investment information available to the investor. Scottrade’s low cost point offers an attractive investment portal for any current or would-be investor.

© 2010 Buy Stocks Online
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Stock Market Courses Online

Stock market courses used to be restricted to college or graduate students, or professionals who received training while at work. However, with the advent of the Internet and direct access to a variety of resources by anyone with an internet connection, online stock courses have become an increasingly effective way for individuals to further their knowledge of how to invest in the market.

Before beginning your search for a stock market course, you will need to consider your goals for investing. If you plan to invest only your own funds, you should decide whether you are investing for retirement, for extra income, or as a full-time business. Depending on your choice of one or a combination of these goals, your strategy should probably vary.

After deciding what your investment goals will be, you can decide which type of online course will be most helpful. Check a reputable stock market forum for suggestions. Several different types are available, differing in cost and in the scope of what is offered. You can find some of these courses by simply doing a Google search, or from any of your favorite search engines. Obviously the low end of the price spectrum is free. Thinkorswim is an example of a company which offers at least some of their online training courses for free.

Other companies charge several thousand dollars per course. An example of this type of company is Investools. The instructors for the more expensive courses are individuals who have excelled in various trading strategies and are in turn teaching them to their students. These are not your usual stock market 101 courses. They also offer ongoing access to charts, historical data, and tips for investing, skills for finding top stocks, charging for these services on a monthly basis. If you are unable to find an online course by searching the internet, you could try asking at your local library for help in finding some companies which offer training programs. Or, if you have a friend who is skilled at his own investments, consider enlisting that person’s help in locating the right course for your situation.

Before selecting a course, and especially one of the more expensive training options, you should consider your own investment knowledge and experience. Are you familiar with basic financial terms, with the ebb and flow of the stock market? If you don’t understand basic concepts of profit and loss, of buy price and sell price, and so on, you need to find a more basic course as a starting point before you buy stocks.

Additionally, you should consider your own financial situation. Do you have a large amount of capital with which to begin investing in the stock market? If you are on a tight budget, you will likely have to start small, and will not be able to invest large amounts either in the market or in training for investing. Also consider your own tolerance for risk. Are you unable to sleep at night because of worrying about your investments? If so, there are types of investments you may want to avoid, such as stock options, because of their increased volatility and risk for losing not only your initial investment, but also owing money beyond what you put in.

Whether you plan to invest for fun, for vacation money, for your retirement, or even as a full-time job, you can find valuable and useful information at a variety of price points on the internet. Consider your situation first, and you will be on the right road to selecting the best course to meet your needs.

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