Stocks that Pay High Dividends

With the global stock markets having gone up considerably from their lows, the number of people taking interest in equity investments has gone up considerably. While choosing stocks, doing a stock research is of prime importance and investors need to indulge in stock investing in only those stocks which are fundamental stable and sound. Financially strong companies are known to give attractive dividends to their shareholders which add to their earnings considerably. Before we understand how to identify stocks that pay high dividends, let us first understand the basic concept of dividends in the next section.

What are Dividends?

Dividends are the monetary payouts made to the shareholders of a company from the net profits earned during a particular period. Generally, dividends are declared after quarterly or yearly financial results of companies. These dividends are paid on a per share basis and the amount to be paid per share is decided by the board of directors or top-level arrangement of the company. So, the more number of shares you hold, more would be the dividend amount you receive in your account. It would not be able to expect dividends from companies which are making losses on operating levels or have high debt burden. On the other hand, the firms with healthy cash in their balance sheet and decent cash flows quarter on quarter will succeed in paying effective dividends. History reveals that firms from the information technology sector, finance sector and automobiles sector have consistently paid good dividends to their shareholders. But, not all investors are aware of finding stocks that pay high dividends.

Identifying Stocks Paying High Dividends

Past Dividend Paying History
It is possible to identify which stocks will give dividends in the future by referring to the past dividend paying history of the companies. A good company always pays dividends to keep the shareholder and stakeholder confidence alive. Paying out dividends ensures the business community that the company is making good profits and is on the right track as far as growth and advancement is concerned. Past dividends paid by a company can be found out by referring to Internet sites related to the stock market or from popular business magazines.

Consistent Net Profits
As stated above, stocks that pay high dividends would be those who earn a strong net profit every quarter. You can find such stocks from all stocks in the market. The number of consistent dividend payers is quite low and in them too you need to be selective. Observe for the quality and track record of the management before stock trading.

Huge Stake Sales
Companies which have sold a large stake to other investors can give high dividends to their shareholders due to sudden and huge cash generated by them. You should keep an eye on big deals executed by companies and try to find which firms have earned abnormal profits in the past few months. The chances of getting dividends are high there. Understanding the stock market properly can alone help in taking wise investment decisions.

These methods will certainly help you to identify stocks that pay dividends. However, attractive dividends cannot be the only criteria for stock market investments. You also need to think whether you will get good stock price appreciation along with the dividends and whether you stand to get bonus shares from the company.

I hope this content will guide you in the right way in online stock market investing. Good luck and earn well!

DISCLAIMER: This article is just for reference purposes and does not recommend any stock market transactions.