Dividend Stocks: Top five Dividend Stocks and how to Invest?
Dividend stocks are the stocks that are distributed to their shareholders in the form of regular cash payments. Dividend stocks are very useful sources of income, however, the best dividend stocks can also be used in great ways to grow your wealth over the long term so here in Top five Dividend Stocks and how to Invest?
But, all dividend stocks are not great investments, and many traders are not sure how and where to start their search. Here is a list and guide of dividend-paying stocks you might want to take consider:
Dividend Aristocrats Index
The Dividend Aristocrats Index is considered to be a great place to discover top dividend stocks. Dividend Aristocrats companies are both in the S&P 500 Index and that pay and raise their minimal dividend for at least 25 consecutive years.
Top five Dividend Stocks and how to Invest?:
1. Lowe’s (NYSE: LOW): The home improvement may not look like a great stock to invest in. And that’s partially true unless you want or like dividend growth. The company has raised its dividend incredibly in 46 straight years, and, over the past decade alone, has raised it with the payout of a massive 471% growth rate. One more point that you might consider for Lowe’s: The average rate at a U.S. home is 37 years old.
2. Walgreens Boots Alliance (NYSE: WBA): Walgreens Boots Alliance is one of the largest retail pharmacy operators in the world. Walgreens is undergoing a massive growth rate. Its plans will lower the costs, increase digital sales, and most importantly, add full-service healthcare clinics in hundreds of its retail locations in the very near term. With a dividend yield well above 3% at this writing and 45 years of annual payout growth, there are a lot of dividends investors can like about Walgreens stock.
3. Realty Income (NYSE:O): If you’re looking for a simple way to invest in high-quality real estate for income and growth, this might be the perfect stock. Realty Income is one of the newest members of the Dividend Aristocrats, having joined the index in January 2020 after reaching 25 consecutive years of dividend increases (along with 50 straight years of paying investors every month).
4. Johnson & Johnson (NYSE: JNJ): Johnson & Johnson owns a portfolio of excellent brands that make products people need — specifically healthcare items. This diversification across consumer health brands, pharmaceuticals, and medical devices is
unequalled and has proven to be a high-profit engine.
5. Target (NYSE: TGT): In the cutthroat discount retailing world, Target has consistently proven it doesn’t have to compete on price to win. At the same time, its focus on increasing its e-commerce business and expanding in-store offerings has kept sales — and profits — growing at a nice clip.
Points to note before you invest:
Before investing in dividends, it’s a smart move to acquaint yourself with what dividend stocks will provide you with wealth. And why those dividends can make excellent investments.
Once you have a keen knowledge of how dividends work, there will be certain important concepts that can help you find excellent dividend stocks for your investment.
1. Payout ratio: A stock payout ratio is the considerate amount of money it pays as per share in dividends, it is divided by its earnings per share. This feeds you at what percentage of earnings a stock pays to its shareholders. A plausibly low payout ratio (say 60% or less) is a great sign that the dividend is long-lasting.
2. History of elevation: It’s a good sign when a company elevates its dividend year after year, most especially when it can continue to do that during stagnations and other tough economic times such as the COVID-19 pandemic or any natural calamity.
3. Steady revenue and earnings growth: When finding the best dividend stocks to retain for the long term, prioritize firmness in the companies you consider. Unstable revenue and all-over-the-board earnings can be signs of turbulence.
4. Durable competitive advantages: This is perhaps the most essential feature. A long-lasting competitive advantage can come in several forms, including proprietary technology, high barriers to entry, high customer switching costs, or a powerful brand name, just to name a few.
5. High yield: A high yield is preferable to a bottommost one, but only if the other four criteria are met. A high dividend is only as strongest as the business that supports it, so compare dividend yields after you make sure the business is healthy and the payout is long-lasting.
The most steadfast dividend stocks can be significant volatility over short periods. There are simply too many market forces that can move them up or down over days or weeks, many of which have nothing to do with the underlying business itself.
Dividend stocks are the stocks that are distributed to their shareholders in the form of regular cash payments. Dividend stocks are very useful sources of income, however, the best dividend stocks can also be used in great ways to hype your wealth over the long term. The Dividend Aristocrats Index is considered to be a great place to discover top dividend stocks. Dividend Aristocrats companies are both in the S&P 500 Index and that pay and raise their minimal dividend for at least 25 consecutive years.
List of dividend-paying stocks you might want to take consider: Lowe’s (NYSE: LOW), Walgreens Boots Alliance (NYSE: WBA), Realty Income (NYSE:O), Johnson & Johnson (NYSE: JNJ), and Target (NYSE: TGT). Points to remember before investing are Payout ratio, History of elevation, Steady revenue and earnings growth, Durable competitive advantages, and High yield.