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Step 4 continued
•Dividend payout ratio
This 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 grow
REITs are required to pay out 90% of their net earnings in the form of dividends so their payout ratio’s will look very high
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MORE IDEAS ON THIS
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
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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
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Step 4 continued
•Dividend yield
This is simply a calculation of the yearly dividend divided by the stock price
A yield that is too low (
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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
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Step 8
•Companies change and plans change
Keep up with the companies you own
Read:
-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
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Step 4 continued
•Dividend growth rate
This information can be found on multiple different sites including the investors page on the companies website
Historically I look for a 10 year dividend growth rate that is outpacing inflation
*This has become a challenge no...
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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 income
The formula is annual dividend per share dividend by free cash flow per share
I look for a number below 70%
FCF payout al...
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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
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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*
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Step 7
•You are ready to begin investing
Hopefully by now you have narrowed your selection down to some high quality dividend stocks
Start buying a few shares and get comfortable with the process
Remember, you are making a long term decision when you decide to buy
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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
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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
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CURATED FROM
IDEAS CURATED BY
A simple basic guide to find a good stock to invest. A thread from @HeroDividend on twitter.
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Other curated ideas on this topic:
Once you have your capital, invest 50% of it into bonds or an index fund (depending on market conditions) while the other 50% to be invested on individual stocks.
However, when investing on individual stocks make sure of the ff:
Unlike Enterprise Products, Antero was forced to reduce its distribution earlier this year. Its quarterly payout declined 27% to $0.225 from $0.308. However, it wasn't the pandemic that coerced this move.
Antero Midstream has reallocated some of the capital it would normally have paid out ...
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