Benjamin Franklin says that, "An investment in knowledge pays the best interest."Investing is not difficult if you have money, you choose purchase of shares of stocks and you have knowledge about high dividend yield stocks. If you have dividend stocks it is not a hard thing.
High dividend yield stock is a kind of stock dividend that is higher than the average of any chosen yardstick. The US Treasury Note is the standard mark where the dividend yield is compared. When the dividend yield of a stock is higher than the rate of the US Treasury Note, then that stock is said to be high yield stock. Stock analysis is differing when a rate is high or low yield; there is no standard for judgment.
Steps to Finding the high Dividend-Yielding Stocks
When looking for the best high dividend yield stocks, the simple answer might sound a bit vice versa: Don’t retreat yield. This is said because a high yield indicates that there’s a higher risk of the dividend being cut or – even worse – being eliminated altogether. In lieu, focus on companies with the following characteristics:-
• Identify Business Models: - First you focus on companies which give massive corporations that have dozens of (often puzzling) operating segments. That means shunning companies like general electric and its countless divisions, and instead going for companies like Philip Morris which only does one thing and kicks back a $2.32 per share annual dividend (a 4.6% yield).
• Stable Demand: - After identifying companies with simple business models, the next step is to identify that there is demand for the product. We all know a company needs a steady stream of cash, so it can afford to pay dividends to shareholders. Stick to industries or sectors with recession-proof or recession-resistant demand (food, alcohol, tobacco, healthcare, etc.)
• Positive Cash Flow: - If a company isn’t generating cash each quarter, the only way to pay a dividend is by borrowing or tapping into cash reserves. Such practices aren’t sustainable over the long-term – and the dividend will eventually be cut.
• High Cash Balance: - When it comes to maintaining dividend cash is a king of the market. Consider it insurance against any unexpected happenings. For a minimum risk, insist on enough cash to cover one quarter’s worth of dividends.
• Lowest Need for Credit: Securing credit in the market is very difficult. I focus on companies that don’t need to raise significant amounts of capital. That’s because when interest rates rise, so you will get your payments. I also suggest you look at companies with a low debt load. This ensures the interest payments would not jerk money intended for us.
How investors find high dividend yield stocks?
1. Investor Research: - The first thing to be done by an investor is to do research on the stocks. This is done by using a stock screener or brokerage website. Sometimes, in order to gain access to the screener, you have to open an account with the brokerage. The opening is followed by an initial investment. For this step, you can have different criteria such as: the share price of stock, the dividend payment and the kind of industry. The industry sector can be financials, conglomerates, utilities, chemicals or raw materials.
2. Price Trends: - Know the trend in the price of the company’s stock – whether it is lower than its usual price. Diminishing price does not necessarily mean the company is in the downward trend. It may mean that the stock is just “on sale”. It happens that lower priced stocks are higher yield.
3. Dividend yield: - Then, look into the dividend yield of your chosen stocks. Dividend yield is dividing the amount of dividend paid by the prevailing or price. The best dividend yield rate is from 5% to 10%. A dividend yield of 15% is usually indicative of company trouble.
4. Set your goal: - on the number of shares you are to acquire. The more shares you have, the more dividends you receive. Well, the number of shares is dependent on your available funds. But it is good to diversify the shares you are to invest in – maybe 2 or 3 companies.
Here I say that there are buy and sell type of dividend stock investors. Do not make an investor who is contented with short term earnings. Be the other type of investor who is getting the dividend payments. If you are accumulating funds, invest on more shares. You can buy additional shares of your existing stocks or you invest on another stock that has been performing well the last few days. It is important that you monitor the trend in the price of your stocks.
You have been given a primer value on high yield stocks. I think with this knowledge, you could start your business with a small investment and keep an eye on the stock market. One day, you will be gainers and will have made a big bank account with the earnings. For more information high dividend yield stocks | dividend paying stocks