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Why You Should Have High Dividend Stocks In Your Portfolio?
High dividend stocks can be a great investment. Any investing portfolio should contain top dividend paying stocks for many reasons. One of these is compounding interest, which any investor knows can be a big money maker. Using high dividend stocks as part of your investment portfolio will give you a higher yield. This yield is then reinvested, and this process repeats itself for as long as you own the stocks. The interest on your investment is compounded, and this will greatly increase your return on these investments. A yield of five percent or higher over a period of twelve months will definitely be in demand by investors. High dividend stocks are a terrific investment because of the fact that dividends are not dependent on the earnings of a company, but rather they are based on the cash flow of the company. High dividend stocks are much more stable, and this is one of the reasons that many investors have these stocks in their portfolio. You should not use the high dividend yield as the only factor when deciding on the stocks to add to your portfolio. Look at both the dividend history and the stock price history over the last twenty years. Only invest in stocks which have shown a history of increasing dividends over the last fifteen or twenty years. This will help you ensure that only high quality high dividend stocks make it into your investment portfolio.
Look at the current high dividend stock list, and determine which stocks work well for your specific investing preferences and portfolio needs. Stock screeners can help you find the right stocks according to your desired criteria. A stock screener is a special software program that can search out the stocks which meet your guidelines. Use a stock screener program to find high dividend stocks, and then research the stocks listed to ensure that they are right for you and your portfolio. High dividend stocks offer the benefit of increasing their dividend and the market value while you hold them usually. A strong investment portfolio will include high dividend stocks. These stocks are much less volatile and far more stable than other types of stocks. High dividend stocks also almost always outperform other stock types as well. These stocks also benefit from tax treatment which is very favorable, because these stocks are not taxed on the basis of ordinary income. High dividend stocks will usually give a better yield and return than a Certificate of Deposit or a money market account. High dividend stocks can help make your investment portfolio much stronger, simply because it contains these stocks.
Finding quality high dividend stocks does not have to be extremely complex, but it does require a massive amount of research on each stock, going back into history for fifteen to twenty years. This will allow you to ensure that the proposed stock is a quality high dividend stock that meets all your investing criteria. These stocks will not make you rich overnight, but these stocks will usually pay between five and fifteen percent dividends, which can be combined with compound interest to make you rich over an extended time period if the high dividend stocks are chosen right.
At least five to ten percent of your investment portfolio should be in high dividend stocks. Any more than ten percent of these stocks for your total portfolio value would result in an investment portfolio that is not widely diversified, and this can raise your risks of a big loss. High dividend stocks should make up a section of your portfolio, but they should not take up more than ten percent of it for the maximum diversity of your portfolio.
The information supplied in this article is not to be considered as medical advice and is for educational purposes only.