How to Pick Dividend Stocks

How to Pick Dividend Stocks By For instance, the $1.3 billion ProShares S&P
500 Dividend Aristocrats ETF (NOBL) , which owns large, consistent dividend payers, is
up 3.4% so far since the calendar flipped to January. If NOBL’s performance were to
keep up at that pace, investors are looking at a 17.8% rate of return in 2016. And that’s not an uncommon occurrence, either.
According to research from Morgan Stanley, dividends have contributed more than 41% of
the stock market’s total returns over the last eight decades. But, as the article points out, to get the
biggest benefit you need to learn how to pick dividend stocks. You need to consider not
just the current dividend yield but also what that yield is likely to be in the years to
come. And while nothing guarantees a dividend payment next quarter a solid balance sheet,
a history of paying dividends and a history of steadily increasing dividends over the
years are important. And there is the matter of dividend yield versus interest rates. Dividend Stocks as an Alternative to Bonds In our article last year about What to Look
for in a Dividend Stock we looked at dividends and interest rates. Dividend stocks are an alternative to buying
bonds. Power companies typically pay dividends that are competitive with bonds but are stable
companies with little growth. Their share prices rise and fall inversely to interest
rates. That is because the company has a fairly stable dividend that does not go up when interest
rates go up. So, the stock price falls as rates rise. The New York Times reports on
how rising long term interest rates are depressing the market. An increase in long-term interest rates rattled
investors on Tuesday, nudging major United States stock indexes lower for the second
day in a row. Traders around the world have been selling
off government bonds in recent weeks. That trend accelerated on Tuesday, bringing down
bond prices and, in turn, driving up the benchmark United States bond yield to its highest level
since late November. The point is that when rates go up stocks,
and especially dividend stocks go down. Ideally what to look for in a dividend stock is a
company that will thrive when rates go up, such as a bank. Or, simply wait until rates
go up and purchase the dividend stock when it is cheap. How to pick dividend stocks for
the long haul is to buy when interest rates are high and the stock is cheap. The dividend
will likely remain the same as interest rates fall and the stock price will appreciate. Another short term concern for buyers is when
dividends are paid. The price of the stock should reflect whether or not you will receive
the dividend or if the seller will pocket the dividend along with your payment for the
stock. For more insights and useful information about
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