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Dividends4Life (30.32)

Three Keys For Successful Investing In Dividend Stocks



February 21, 2010 – Comments (1) | RELATED TICKERS: JNJ , KO , MCD

To ensure a retirement that is free from financial concerns, there are certain things that must be done today. For many people this is not a desirable task. However, building a secure future by investing in quality dividend stocks is neither complicated nor overly burdensome. Below are three simple keys that will help you to be a better investor:


I. Understand Your Goals

If you don't know where you are going, how do you know when you get there? A large number of investors fail because they have no goals or investing convictions. Instead they jump from one investing method to whatever is hot today. Before investing, you should clearly define what you are tying to accomplish, then determine your goals and desires. It is my goal to create an ever-increasing income from dividend stocks, while it is my desire to beat the S&P 500 index over the long-term.

II. Select the Right Stocks

It is our nature to want it now. In dividend investing this means high yields. Depending on the the direction you chose in I. above, a portfolio of high yield stocks may not be the best means to help you accomplish your goals. Historically, high-yield stocks have been more prone to cut their dividends, so for me, they don't align well with my goal of "ever-increasing income". That is not to say I don't hold some high-yield, high-risk income stocks, but they are not my core income holdings. Instead, I prefer to focus on stocks with a reasonable yield and a long history of consistently raising their dividends. Companies in this category include:

Abbott Laboratories (ABT) - [Analysis]
Yield: 3.02 | Dividend Growth: 8.4% | Consecutive Years of Increases: 37

Genuine Parts Co. (GPC) - [Analysis]
Yield: 4.25 | Dividend Growth: 2.6% | Consecutive Years of Increases: 53

Johnson & Johnson (JNJ) - [Analysis]
Yield: 3.07 | Dividend Growth: 7.5% | Consecutive Years of Increases: 47

The Coca-Cola Company (KO) - [Analysis]
Yield: 3.02 | Dividend Growth: 7.9% | Consecutive Years of Increases: 47

McDonald's Corporation (MCD) - [Analysis]
Yield: 3.28 | Dividend Growth: 16.9% | Consecutive Years of Increases: 33

The Procter & Gamble Company (PG) - [Analysis]
Yield: 2.86 | Dividend Growth: 7.3% | Consecutive Years of Increases: 53

SYSCO Corporation (SYY) - [Analysis]
Yield: 3.50 | Dividend Growth: 4.2% | Consecutive Years of Increases: 39

III. Patience

The stock market does not travel in a straight line. There will be times it consistently goes down leaving you wondering if it will ever hit bottom. These are the times that many investors' patience is tried. But for those with clear goals and confidence in their chosen strategy, they will find that the most times are those that present the greatest opportunities.

Full Disclosure: Long ABT, GPC, JNJ, KO, MCD, PG, SYY. See a list of all my income holdings here.


1 Comments – Post Your Own

#1) On February 21, 2010 at 2:43 PM, selenalvarez (< 20) wrote:

Dividend Aristocrats are companies in the S&P 500 that have increased dividend payouts to shareholders every year for the last 25 years:

Dividend Aristocrats

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