Facebook
Twitter
LinkedIn
Instagram
Youtube

Does Dividend investing have a strategy?

Team Veye | 24 Feb 2020

Does Dividend investing have a strategy?

Dividend investing immediately comes to your mind when the country is having record low-interest rates, a recovering residential real estate market, strong cash balances and investors searching for yield.

Dividend investing has been a time-tested way to profit from stocks. In these times of ever falling bank interest rates coupled with uncertainty in other forms of assets, dividend investing has gained more traction. More so, whether the economy is booming or not and whatever your goal be.

For most stocks, the dividend income just keeps coming despite the swings in the market. For this reason, dividend investing can be worth it for investors with high net worth. Dividend investing has been a traditional source of expected steady retirement income for many decades.

Dividend investing offers a chance to create a regular stream of income in addition to the growth in a portfolio's market value from asset appreciation. Buying stocks that pay dividends can reward you over time as long as a few guidelines are followed and care taken while making intelligent buying choices.

Do income-seeking investors look only for dividend yield? On the contrary, many other factors are equally important while selecting stocks for this purpose.

The first and foremost being to identify companies known for their long-term outperformance. This done is just like having won almost half a battle.

The screening continues for companies with a high return on capital. Such companies tend to have sustainable cash flow and are likely to be hiking dividends. Companies with stable and increasing dividends are the most sought ones.

Good investors while seeking good returns look for safety also simultaneously. This is reflected primarily by the dividend payout ratio.

As one bad event could wipe out the whole thing, it is always wise to go for companies with a stable income and cash flows with an adequate payout ratio besides looking for good dividend yield. By investing in a company currently paying lower-than-average dividends but growing quickly may eventually turn out to be a wise decision years later.

Disclaimer

Veye Pty Ltd(ABN 58 623 120 865), holds (AFSL No. 523157 ). All information provided by Veye Pty Ltd through its website, reports, and newsletters is general financial product advice only and should not be considered a personal recommendation to buy or sell any asset or security. Before acting on the advice, you should consider whether it’s appropriate to you, in light of your objectives, financial situation, or needs. You should look at the Product Disclosure Statement or other offer document associated with the security or product before making a decision on acquiring the security or product. You can refer to our Terms & Conditions and Financial Services Guide for more information. Any recommendation contained herein may not be suitable for all investors as it does not take into account your personal financial needs or investment objectives. Although Veye takes the utmost care to ensure accuracy of the content and that the information is gathered and processed from reliable resources, we strongly recommend that you seek professional advice from your financial advisor or stockbroker before making any investment decision based on any of our recommendations. All the information we share represents our views on the date of publishing as stocks are subject to real time changes and therefore may change without notice. Please remember that investments can go up and down and past performance is not necessarily indicative of future returns. We request our readers not to interpret our reports as direct recommendations. To the extent permitted by law, Veye Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss, or data corruption) (as mentioned on the website www.veye.com.au), and confirms that the employees and/or associates of Veye Pty Ltd do not hold positions in any of the financial products covered on the website on the date of publishing reports. Veye Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services.