Step 4 continued •Dividend payout ratioThis tells us what % of net income is paid out in the form of dividends. A healthy % to look for is 30% to 50%This range indicates that the company is paying out a solid portion of their earnings but keeping cash on hand to growREITs are required to pay out 90% of their net earnings in the form of dividends so their payout ratio’s will look very high

Dividend Payout Ratio

Step 5 •We are done digging in and looking under the hood at some of the financial metrics•The next step is to supplement your own research with some quick searches on a few of your favourite sites

Dividend Growth Rate

Step 4 continued •Dividend yieldThis is simply a calculation of the yearly dividend divided by the stock priceA yield that is too low (<1%) indicates that the company doesn’t make the dividend a priorityA yield that is too high (>6%) could indicate a struggling business

Dividend Yield

Step 2 •As mentioned above, understand how the company makes money•Research their industry, their business model, and who their competition is •These are all basic searches and shouldn’t be hard to find

Do Your Research

Step 4 continued •Free Cash Flow payout This ratio is very similar to the dividend payout ratio but it uses free cash flow instead of net incomeThe formula is annual dividend per share dividend by free cash flow per shareI look for a number below 70%FCF payout allows you to have a better economic outlook on the business because net earnings can cover up some business flaws

Free Cash Flow Payout

Step 6 •Look at the recent performance of the stock. Has it sold off lately? Is it at all time highs?•Timing the market is not as important as time in the market but it helps to see how the stock performs during market cycles

See Their Current Trend

Step 1 •Make a list of 8-10 dividend stocks that you are interested in buying•This list should contain companies that you are familiar with or have heard of before •Understanding how the company makes money is essential to begin the process

Find The Stock

This post will give you•A step by step process for finding dividend stocks•Ensuring that they are quality•A long term plan for wealth Disclaimer:*This thread is not investment advice*

Content & Disclaimer

Step 7 •You are ready to begin investingHopefully by now you have narrowed your selection down to some high quality dividend stocksStart buying a few shares and get comfortable with the processRemember, you are making a long term decision when you decide to buy

First Buy

Step 4 •Do some math. There are a few basic formulas to analyze. I promise it’s nothing you can’t handle Formulas:-Dividend yield-Dividend payout ratio-Dividend growth rate-Free Cash Flow payout

Calculate It

Step 3 •Most major companies will have an “investors” tab somewhere on their website•Find this page and see what it contains•This page should have a lot of the information that you need to make informed decisions

More Research

Step 8 •Companies change and plans change Keep up with the companies you ownRead:-earnings reports-news headlines-industry info Your investment research shouldn’t stop when you buy a stock, it should continue as long as you hold it

Keep Updated

A simple basic guide to find a good stock to invest. A thread from @HeroDividend on twitter.

Dividend Yield

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Dividend Stocks

Growth-rate to PE ratio