Finding a Dividend Paying Stock Worth Buying Now

By: Chris on 2013-06-29

Stock Trading Tips

Markets fluctuate sometimes for reasons hard to understand. In the past the market has gone up, gone down and moved sideways which can all be expected. One thing that you can be sure of is the market will be there. For an investment to make you money in all stages of market environment there are certain ways at which you can maintain and even combat these different fluctuations of action. One particularly expansive way to do so is through dividend paying stocks (DPS). A DPS can help establish a defense and possibly make money as markets fluctuate.

Classical Views of Investment Strategy Development

There are many ďclassicalĒ views on the development of an investment strategy that should not be ignored. †Weíve all heard that your goal should be to surpass returns possibly made through involvement with a Treasury Fund. Most investors arenít looking at the long term in todayís investment world. Short term profits have become the new norm according to commercial advertisements and the like.

It is extremely attractive to think of stocks as this, but youíll find that short term gains in the financial markets can be accomplished in other ways. Stocks can be taken back to what has worked for years with respect to purchasing quality stocks that offer dividends. Most are looking for stocks that offer dividend yields larger than how you might have fared within a Treasury Fund. This may not always be the answer.

A Company Has Dividend Decisions

This isnít always the answer in the end as Iím sure your past results have showed. Just because a stock pays an extremely high yield doesnít mean success. Yields fluctuate as economic factors adjust which is a simple idea. Sometimes yields cannot be maintained. Some quality companies will face tough times and either need to reduce or worst case, eliminate paying dividends all together.

Knowing this now I think itís a good time to re-establish your evaluation process. †A good way to do so without reinventing the wheel is to adapt an old habit that most have moved away from. Think about taking a look at a companyís balance sheet. We all know that a company with liabilities flowing overboard and a lack of cash retention may be your first signal that dividends may be in jeopardy.

†Those who previously sought out this particular company because of the dividend yield may find themselves bailing on the stock which may be evident in the stock price. Sometimes this can be an overreaction while other times it could be part of the first signs of a companyís non ability to maintain its growth streak after all.

Try To Become A dividend Paying Companies Decision Maker

We know the income statement has real value in analysis of potential stocks. Some argue you can find out how profitable a company is, but I say you can only really get an idea of how well. You need to focus on prior revenue and profits rather than how they look today. Look for patterns of distress or a possible short term hiccup.

A company who has established an identity within their ability to pay dividends is a company who will strive to continue. What is meant by this is simple. If a company has a long established dividend payout they may feel an obligation and a fear of relinquishing their dividend duties. Though not mandatory for most, you may find it a real obligation for these companies to maintain stability within their investor relationships.

Combat Issues of Stagnant Portfolio With Dividend Paying Stocks

Youíll here this across Stocks and Stocks and everywhere else. Remember to remain diversified in your holdings. Holding all of your investment opportunities within one sector such as technology may not hurt you in the short term, but down the line could have adverse affects. Though it may not be parallel to the hype of more money now that seems to be so popular today, youíll find time is essential to profitable growth within dividend paying stocks. As a diversified holder that includes dividends you can combat many of the issues that come with stagnant portfolios. As risk changes so does your portfolio.

About Stocks and Stocks

Stocks and Stocks has been helping traders trade for more than 4 years now. What we bring to the table is an unbiased point of view on individual stocks and the stock market.

It is our hope that you are truly able to gain some value from this approach to trading education. To best take advantage of this site it is important to truly understand concepts and not fall into the trap as most traders. This trap being moving on from strategy to strategy before you master it. Don't become a aware of many things and a master of none!

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