- IMG_20250428_065815_(1080_x_350_pixel).jpg (75.17 KiB) Viewed 7912 times
- Dividends are cash payments companies send to the shareholders.
- Goal is to build a portfolio that pays you regularly which could be monthly/quarterly.
For instance, If you own 100 shares of Coca-Cola (KO), you get $18 every 3 months. That's how dividend investing works.
4 Signs of a Great Dividend Stock
1. High Dividend Yield. This is calculated by Yearly dividend ÷ stock price. It is:
- Good when it is between 3-6%. For instance, Verizon giving 6.7% dividend.
- You Avoid when it's over 10%, which means it may be unsustainable.
2. Long Payment History: Preferably 10+ years of paying dividends is great.
- For example, having Procter & Gamble (PG) paying dividends for 130+ years. Shows that the company has a great payment history.
3. Low Payout Ratio:This is calculated by Dividends ÷ profits < 60%. With this result, it shows that companies can keep paying consistently.
4. Stable Industry: It's important to invest in companies in the stable industries like utilities, healthcare, consumer goods, etc.
5 Steps to Start Dividend Investing (2025)
Open a Brokerage Account. -You can use apps like Robinhood, M1 Finance, or Webull. A majority of them lets you start with $10.
Pick Reliable Dividend Stocks - in 2025:
1). Johnson & Johnson (JNJ): A giant company in the healthcare sector, gives a 3% yield, which is impressive.
2). Realty Income (O): Pays a monthly dividend of up to 5% yield. That's great also!
2). Apple (AAPL): A tech stock with growing dividends of 0.5% yield.
Reinvest Dividends (DRIP) - It's great to buy more shares with your dividend cash to grow your future payouts.
Diversify Across Sectors - Spread your investments across different industries like healthcare, utilities, tech, etc.
Hold Long-Term - It's great to compound your investments and it works best if you do it for over 5+ years.
5 Mistakes to Avoid
Chasing High Yields: Don't keep chasing a high yield because a 15% yield often means trouble. It's too good to be true offer. Ignoring Growth: Make sure to research and pick companies that raise dividends yearly. For instance, McDonald did that . Tax Ignorance: Many investors do not know that dividends are taxed. So, use retirement accounts (IRA) to save some cash. 2025 Dividend Trends to Watch
1. ESG Dividends: These are companies with green/social initiatives (e.g, NextEra Energy).
2. International Stocks: Investing in high-yield dividends from Europe/Asia like Unilever.
3. REITs: Try to research and invest in real estate stocks paying monthly income.