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Hi, My name is Aaron and I‘m with Dividend Stocks Research. Today were

reviewing our recently published article…

Six Tips to Picking the Perfect Dividend Stock

If you’re retired, or about to retire, any extra income is going to be

welcome relief… and that’s probably why you’re looking a dividend

stocks.

You are trying to pump the proven power of dividends into your portfolio… but you need to be

careful.

How do you know what the best dividend stock for you is?

Well, begin with the end in mind. You want your portfolio to reward

you with the historically strong combination of both capital

appreciation and dividend income!

Here are six quick topics to think about before making your trade…

• Look for consistent dividend increases. • Don’t pay too much… keep the P/E Ratio

under 20• Watch the Payout Ratio• Look for the warning signs• Make sure you’re comfortable• Put your money to work!

So, let’s look at each one of these a little more closely…

How To Find a Good Dividend Stock

If a company is increasing their dividends year in and year out, it

probably means they’re doing something right! So, you should

look for companies that have been consistently increasing their

dividends.

There are more than 200 U.S. stocks that have been able to increase their dividends for at least ten years in a

row.

You can find these stocks by setting up screens with your brokerage

account.

You can also go directly to the mother lode of dividend stocks, the S&P Dividend Aristocrats. This is

the Elite selection of the 200 stocks with consistent dividend increases.

The S&P Dividend Aristocrats is a lineup of stocks in the S&P 500 that

have increased their dividend payouts for 25 consecutive years.

But true to their name, these Aristocrats can be a bit pricey.

Because the market always shifts from one phase to another, dividend

stocks drift in and out of favor. When they are the market’s

darlings, they can easily become overvalued.

Quality just doesn’t show up very often with a bargain price tag. But

you also don’t want to pay too much for a stock, so you should usually steer clear of a stock with a P/E

Ratio (Price/Earnings Ratio) that’s higher than 20.

Once you found a great company with consistent dividend increases,

and a low P/E, next you want to look at the payout ratio.

You don’t have to dig too deep to make sure the dividend that’s being

paid today has a good chance of being paid tomorrow. All you need

to do is check out the company’s dividend payout ratio.

The payout ratio is simply the percentage of earnings a company pays in dividends. While investors

want to be well taken care of by the company, management has an obligation to take care of the

company’s future.

Too much money going into dividend payments, and not enough going

into research, or strengthening the balance sheet, and you can count on

trouble ahead.

And keeping an eye out for trouble is never a bad thing. So here’s what else could be a sign of tough times

ahead.

Watch Out For These Warning Signals

The most obvious signal is a dividend that’s been cut. When this happens, you can’t help but wonder if this is just the tip of the iceberg.

Dividends that are cut don’t just hurt your yield. They usually hurt the price of the stock as well. You just don’t run into many situations

where stock prices go up when dividend payments go down.

And what about when stock prices go down? That’s another cause for

concern, because falling stock prices usually don’t go hand in hand with

growing dividend payments.

These are fairly easy signals to read. But there’s another signal that can

be trickier, and that’s the actual yield a stock pays.

How high a yield should you feel comfortable with when you start

investing in dividend stocks?

Because the higher the yield, the higher the risk, this decision should reflect your tolerance for risk, your

investment goals, and your investment timeline.

High yields are not automatic danger signals.

But they should prompt you to take a long, hard look at the company’s management team. Decide if they

are both willing and able to continue paying dividends.

There’s something else to keep an eye on. Look at the same thing the

management team looks at.

Keep An Eye On The Balance Sheet

When it starts to show signs of running short on cash, run for the

exits, because chances are there will be a dividend cut coming.

This is what happened to GE in 2009. The company cut its

dividend for the first time in 71 years.

GE Chairman Jeffrey Immelt called the move, “The right precautionary

action at this time.”

Before the dividend was cut, the yield was 14%. Why so high? GE’s

stock price had been taking a beating.

These are some of the warning signals you can watch for. And they are reminders that when you start dividend investing, it is a good idea

to balance your dividend stocks between high yields and more

modest yields.

So once you’ve done a bit of homework, it’s time to make your

move.

Make sure you’re comfortable with what the company does, and how

it’s future looks. Then you need to strike when the iron is hot.

Once you’ve made up your mind, make your investment, and make

your money work for you!

Then you can sit back and watch your dividend paychecks start rolling

in!

For more free information on Dividend Stocks go here:

DividendStocksResearch.com

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