Investing in the stock market and profiting from it takes a lot of study, patience and depth of knowledge regarding company performances. One needs to have an intelligently designed framework of thought, that can effectively select the best stocks out of the whole lot out there. For the beginner in stock investing, the whole exercise can be intimidating and confusing. Choosing top stocks that pay dividends of high volume regularly, requires a lot of study and dedication to analyze the market developments.
Most people who begin investing in the stock market, thinking that the only way to make money there is through following 'Buy Low, Sell High' philosophy. This kind of stock trading is speculation at best and the people who invest money with this purely opportunist philosophy, are speculators. Actual investors, don't make their decisions purely on the basis of how the stock market index behaves. They base it on the knowledge of how a company performs and what potential lies in its business. Best stocks, which pay monthly or quarterly dividends, can be good regular sources of income. To choose them consistently, one can take help of various analytical tools available on the Internet. However, ultimately the decision to buy a stock or not should be made only after studying the company's performance details, balance sheets, quarterly reports and its business operations. A stock that pays high dividends is an asset, which you can bank upon. Here I discuss how you can choose top stocks with dividend payments, using screeners like the one offered by Google search engine.
How to Choose High Dividend Stocks?
Analyzing stock market performances is studying gargantuan quantities of numbers and sift useful information out of it. There are online software programs available now, which can make it easier for you to select stocks that earn quarterly dividends, with good profits. Cheap stocks with dividends of high quantity are rare. Rather than buy what you choose, choose what stocks you buy! Here is how you can sift out such stocks, using the screener offered by Google.
Firstly, open Google's home page and go to its 'Finance' section. If you don't find it, just search for 'Google Finance' on the search engine. Go to that page and you will find a lot of financial news along with performance report of most world market indices. One link on the left will be 'stock screener'. Clicking on that link will open up the stock screening interface.
Select the stock exchange in which you plan to carry out your trade and you may also select a particular sector that you are interested in investing. If you do so and search, you will get an alphabetical list of stocks in that sector, along with the company's market capitalization, P/E ratio, dividend yield and information about how much has the stock price changed over 52 weeks. I assume that since you are planning to invest, you know what these stock terms mean. To pick stocks that pay dividends in the high income bracket, you need to have an idea about the characteristics of a good stock option.
Now you can screen these stocks further using the form interface in the Google screener, by putting lower limits on the values of P/E ratio, market capitalization and most importantly, a lower limit on percentage of dividend yield you expect. Generally, a dividend yield higher than 5% and a high market capitalization are preliminary indicators of a good stock choice, which can give you a high dividend yield. Also, check the earnings per share values (more than $1/share is good) and the ROE (return on investment) for past 5 years (more than 10% is good.). Using this tool and these criteria, you can screen stocks that fit your investment budget and narrow down your choices. After this preliminary step, the stocks that you think are good choices should be studied in even more depth. That will help you in making an informed decision. There are always risks when it comes to investing in stocks, but then as they say, there are no high gains, without risks.
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