A Fund that Focuses on High Dividend Stocks

Tweedy, Browne Inc. is a company that specializes in value investing topics, and has done some great research on high dividend stocks. In a recent article on the Kiplinger site, they speak about a new fund that Tweedy, Browne has introduced. Here is what they have said about the fund:

Tweedy, Browne Worldwide High Dividend Yield Value is the firm's first new fund in 14 years. Like other Tweedy, Browne products, the fund, which opened for business on September 5, follows Graham's value-investing principles: hunting for companies with shares selling at a discount to what knowledgeable buyers would pay in an acquisition or buyout. To that, the new fund layers on a requirement for stocks with above-average dividend yields.

Although stocks with the highest yields tend to be concentrated in sectors such as finance and energy, the managers say they'll strive to diversify the fund's holdings by country and sector. "We're going to own some bank stocks, which are trading at attractive price-earnings multiples and have attractive dividend yields," says manager Bob Wyckoff. "But you'll also see some pharmaceutical, food and beverage, insurance, media, and industrial companies." The fund, which will likely hold 35 to 40 stocks (a relatively small number), will avoid companies in cyclical industries, such as steel and chemicals.

If you are not comfortable investing in individual stocks, or are just looking for some high dividend stocks investment ideas then be sure to check this fund out.

Six Signs of a Winning Stock: High Dividend Stocks is one of them

There recently was an article by the Motley Fool that listed six signs that a stock is a good one - high dividend stocks happened to be one of them:

4. Dandy dividends
In our research, we're constantly studying past big winners to find the common ties that bind them. Retailer Family Dollar Stores (NYSE: FDO) and consumer products giant Procter & Gamble have different business models. Both, however, have trounced the market over the years, and both have paid a dividend ever since they were small companies -- in P&G's case, since 1890!

Just because a company is small and pays a dividend, though, that does not mean it is destined for greatness. But a dividend is a positive indicator, a telling sign of both financial strength and management's confidence that the company will continue to be solid through good times and bad. Progressive began paying its dividend back in 1986, when it was still capitalized at around $250 million.


Interesting perspective on the high dividend stocks strategy.

When to Sell a a High Dividend Stock

Selling stock is tough, especially if you are the holder of high dividend stocks. These stocks provide a high level of income to an investor so unloading them can be a difficult thing to do - you lose that cash flow! However, there may be times when it may be a good idea to sell. Here is an list from About.com with some reasons to sell a stock:

Personal Reasons to Sell High Dividend Stocks:

• Risk Tolerance Reached
• You Need some Cash
• Moral, Ethical Conflicts
• The Grass is Greener
• You’ve Reached your Goal

Market Reasons to Sell High Dividend Stocks:

• The Stock Drops by x%
• The Company Flounders
• When a Stock is Over Valued
• Rebalancing Your Portfolio

These are all things to consider when looking at your high dividend stocks. I typically do not like to sell but these may be some reasons that I would consider while examining my portfolio.

High Dividend Stocks: Build an ETF Dividend Income Portfolio

Investors are ending the year in a wary mood. Sure, 2006 was a very good year for U.S. investors and substantially better for global ETF investors but what is going to happen next year?

The honest answer is that nobody knows.

The smart investor will make sure that their portfolios can benefit from rising global markets but still weather the inevitable pullbacks. One way to achieve this is to have a nice chunk in Dividend and Income rich ETFs.

In 2007, Chartwell ETF Advisor is adding a seventh model ETF portfolio which will focus on these markets. The reason is that baby boomers need to generate retirement income and fixed income alone will probably not get the job done. Investors need the prospect for capital appreciation plus some downside protection from high dividend lower volatility stocks.

Here are some positions that the Chartwell Dividend/Income ETF portfolio will likely hold going into 2007.

The PowerShares International Dividend Achievers ETF basket (PID) contains 60 international ADRs (American Depository Receipts) that trade on U.S. exchanges. All of these companies have increased their annual dividend for five or more consecutive fiscal years. The portfolio is rebalanced quarterly and reconstituted annually. 55% of the companies in this ETF are classified as large-cap value, 16% mid-cap value and 13% small cap value.

Another interesting new ETF from Powershares is the Financial Preferred Equity ETF (PGF). This is the first ETF to provide investors access to preferred shares within the tax efficient ETF structure. The preferred marketplace is over $200 billion and again it is a way to enjoy potential of capital appreciation with dividend income. All dividends from this ETF are expected to be qualified dividend income.

Another Option is the recently introduced First Trust Morningstar Dividend Leaders ETF (FDL). This is a portfolio of the top 100 highest yielding U.S. stocks screened for consistent records of dividend payments as well as the ability to sustain future payments. Individual company weightings in the ETF are capped at 10% and stocks weighing more than 5% each cannot exceed 505 of the total portfolio.

Then of course there is the fast-growing family of WisdomTree ETFs which weight all holdings in their ETFs based on dividends. These range form domestic ETFs such as the Total Dividend Fund (DTD) to international options such as the International Dividend Top 100 ETF (DOO) and a variety of international sector ETFs like the International Utilities sector ETF (DBU).

Investors need to be careful not to have the same positions in all of your dividend/income ETFs. It is important to spread it around by having ETFs with different weighting schemes such as market weight, equal weight, dividends per share/price and available dividends. It would be nice to have your 2007 Christmas stockings full of dividends

Carl T. Delfeld President & Publisher Chartwell Partners http://www.chartwellETFadvisor.com

Carl has over twenty years of experience in the global investment business with a strong background in Asia.

• Author of global investor primer "The New Global Investor"

• President of the global investment advisory firm Chartwell Partners

• Publisher of the Chartwell Advisor ETF Report and Asia-Pacific Growth

• Columnist on global investing with Forbes Asia: "Global Gambits"

• Former U.S. Representative to the Executive Board of Asian Development Bank

• Chairman of the global economic strategy think tank ChartwellAmerica

• Asian specialist with the U.S. Joint Economic Committee and the U.S. Treasury

• Former member of the U.S. Asia Pacific Economic Cooperation Committee

• Former investment executive with Robert Baird & Company and UBS

• Graduate of the Fletcher School of Law & Diplomacy with economics scholarship from U.S.-Japan Friendship Commission

Article Source: http://EzineArticles.com/?expert=Carl_Delfeld

Dividend Reinvestment Plans: Investing on Automatic Pilot

If you're like many investors who squander those small dividend checks from your stock portfolio, a Dividend Reinvestment Plan (DRP) might be just what you need. Just as its name implies, a Dividend Reinvestment Plan allows you to reinvest some or all of those dividends into more stock of the issuing company. Unlike purchases made through traditional means, partial or fractional shares, as well as whole shares, are available.

Technically, there are two types of DRPs. The first type involves buying shares at the market through an outside trustee. Although the company may subsidize the transaction costs, buying shares at a discount is not allowed.

The second type allows you to purchase directly from the issuing company, which may provide a discount from the market price. This is a distinct advantage over buying from an outside trustee.

Besides giving dividends a better purpose than sitting in your pocket or in a brokerage cash account, a DRP may offer other advantages as well. By buying on a regular basis, you are “dollar cost averaging” your purchases, an investment strategy designed to reduce volatility. Dollar cost averaging involves continuous investment in securities regardless of fluctuation in the price. Of course you should consider your ability to continue purchasing through periods of low price levels. This type of plan does not ensure a profit or protect against loss.

Secondly, many companies offer added options with their DRPs, including purchasing stock at low minimums and sometimes even offering shares at a discount (often 3-5%) off current market prices.

From a tax standpoint, you are subject to income taxes on the value of the dividends whether you reinvest them or not. Your tax basis for all your shares including the reinvested dividends is the amount paid for the original shares plus the dividends, minus any costs deducted from your dividends as a service charge as part of the DRP.

Keeping good records is a necessity, especially if you plan to continue participating in a DRP over a number of years. Without the records, it may become very difficult to track all your purchases. A little bit of effort now can save you big headaches later on.

Usually, you will receive a quarterly statement outlining your DRP account. Among other things, these quarterly statements will detail your on-going investments, how many shares are held by the program, how many shares are held be you, and the value of all your shares.

Not all companies offer DRP's but, for a list of one's that do, there are many web sites dedicated to these plans. These internet sites not only have a full list of companies with DRPs, they also offers online enrollment services. For securities held in a brokerage or wrap account, check with your brokerage firm to determine if they have the means to enroll you. If all else fails, try either the company itself or its transfer agent.

Although it is easy to see the advantages of DRP programs to the investor, we should not overlook the benefits to the issuing company. Besides helping to stabilize market prices, a DRP is a relatively efficient way to raise capital and, because companies only “promise” to continue these programs in the future, the issuing company controls when and how much capital will be raised.

Over 1,000 companies currently offer some type of Dividend Reinvestment Plan and, with a little research, you should be able to get on the path of “automatic pilot” investing for the future.

Glenn (“Chip”) Dahlke, a senior contributor to the Living Trust Network, has 28 years in the investment business. He is a Registered Representative of Linsco/Private Ledger and a principal with Dahlke Financial Group. He is licensed to transact securities with persons who are residents of the following states: CA. CT, FL, GA, IL. MA, MD. ME, MI. NC, NH, NJ, NY.OR, PA, RI, VA, VT, WY.

If you have any questions or comments, Chip would love to hear from you. You may contact him at dahlkefinancial@sbcglobal.net. You may also contact him by going directly to the Living Trust Network web site located at http://www.livingtrustnetwork.com

Copyright 2005. LivingTrustNetwork, LLC. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without the written consent of the Living Trust Network, LLC.

Article Source: http://EzineArticles.com/?expert=Glenn_Dahlke

High Dividend Stocks: Reinvesting Dividends - Why You Should

Here is a great article about reinvesting dividends from high dividend stocks:

First of all, I am going to briefly describe what dividends are. Dividends are simply payments made to stockholders on a per share basis. Usually dividends are paid in cash but occasionally a company may issue a stock dividend (you would be given more shares of stock usually based as a percentage). Some companies issue dividends on a per year basis while the majority of companies issue dividends quarterly. Now that you know more about what a dividend is, let's take a look at why it is so important to reinvest them.

Let me give you an example: $5,000 invested in Altria (MO) at the beginning of 1976 would be worth about 1.4 million today with all dividends reinvested. Now if you take the same $5,000 investment from 1976 but do not reinvest dividends, the total value today is only $375,000, over a 1 million dollar difference by not reinvesting dividends. Furthermore, the difference is not because Altria has paid you over a million dollars in dividends over 30 years. What happens when you reinvest your dividends is that you gain more shares of stock allowing you to compound the return of your original dividends. Not only do you gain extra value when the shares go up, you also will be earning dividends off previous dividends that have been reinvested into stock. Over time as the stock price fluctuates, you will be gaining more shares when the price is low, and fewer shares when the price is high. In effect, you are dollar cost averaging with your reinvested dividends.

Most companies that pay dividends have DRIP (dividend reinvestment) plans. These plans allow you to sign up to have your dividends automatically reinvested in more shares of stock. In addition, most of these plans are offered as a free service to shareholders and they will purchase fractional shares. Of course, if a company does not have a DRIP plan it might not be practical for you to reinvest dividends if you have to pay a commission each time. In most cases, you are still required to pay taxes on dividends even if you don't receive them as cash. Check with your tax professional and plan accordingly for taxes on the dividends. Finally, dividend reinvesting works best when you are investing for the long term. This allows more time for your investment to compound. If you are looking at a shorter term outlook, dividend reinvestment may not be for you.

For more free information on investing visit http://www.1stock1.com. 1stock1 also offers a stock performance guide that has calculated the value of several stocks with dividends reinvested over the past 30 years. The stock performance guide can be accessed here: http://www.1stock1.com/1stock1_023.htm.

Article Source: http://EzineArticles.com/?expert=Alan_Reisch

Top 10 High Dividend Stocks According to Investors Business Daily

Although it is a little dated, an article at Yahoo! provided by Investors Business Daily has a list of what they consider to be the top 10 rated high dividend stocks.

To get on the list, these high yield stocks must posses the following:

We screened for companies with an annual yield of 3% or higher. In addition, a Composite Rating of 85 or higher was required, ensuring that the stocks on the list are among the top 15% of performers right now. IBD’s Composite Rating identifies stocks with a powerful combination of strong fundamentals and leading price performance in their industry groups.

To ensure that the companies meet all our criteria of strong sales and earning growth, and leading price performance, they must have Earnings Per Share (EPS*) and Relative Price Strength (RS**) Ratings of 70 or higher.

Only stocks with Accumulation/Distribution Ratings of “C” or higher were included in the list. The rating uses a price and volume formula to determine if a stock is under accumulation (buying) or distribution (selling) in the last 13 weeks. A signals heavy buying; E is heavy selling. Price rises on above-average trade help lift the Acc/Dis Rating, while price declines on above-average volume hurt the rating. Furthermore, the current price of the stocks had to be at least $10 with an average daily volume of 200,000 shares or higher. Finally, all stocks were within 20% of a 52-week high as of the Wednesday, December 6 market close.

The list of high dividend stocks includes a wide variety of companies including oil and gas stocks, rail, and financial stocks. The list is dominated by energy firms, so I would not suggest simply buying all stocks on the list, but doing further analysis on ones that interest you.

Using ETF's To Buy High Dividend Stocks

If you as an investor are not comfortable researching and buying individual high dividend stocks, then there are other options to choose to ensure you get dividend exposure in your accounts. An investor can buy exchange traded funds that have a high dividend stocks focus. Here are some examples of these ETF's:

iShares Cdn Dividend Index Fund
iShares Dow Jones Select Dividend Index
PowerShares HighY ield Dividend Achievers

These three indexes provide good exposure to high dividend stocks and allow an investor to enjoy the benefits of a portfolio that includes dividend investments. As usual, ensure your still do some research on the ETF so you know exactly what you are buying.

Financial Stocks are Good High Dividend Stocks

If you look at the list of high dividend stocks available on the S&P's Dividend Aristocrat list, you will notice that a number of them are stocks in the financial and insurance sectors. The reason is simple - these stocks have typically been around for a long time, earn a lot of cash, and are constantly looking for opportunities to reward investors for their investment in the company.

Here is a quick list of these financial and insurance stocks that have increased their dividends year after year for at least 25 years:

BAC Bank of America Corp.
FHN First Horizon National
FITB Fifth Third Bancorp
MTB M&T Bank Corp.
SNV Synovus Financial
USB U.S. Bancorp
WL Wilmington Trust Corp.

Each one of these stocks might be good additions to a watch list for high dividend stocks investors.

Sin Stocks - High Dividend Stocks with a Conscience

There is a group of stocks out there that people often refer to as Sin Stocks - and a lot of these Sin Stocks are high dividend stocks. There can be a place for these stocks in a dividend portfolio, however an investor must be aware of what they are investing in and comfortable with the direction of the company.

A couple of sin stocks examples include Altria Group or Las Vegas Sands. To invest in these, and investor must be comfortable with investing in Cigarette stocks or gambling. Some folks are morally opposed to this and thus these stocks would not make good investments. However, Altria sports a dividend yield of over 4% so it can have a pretty good impact on a dividend paying portfolio. Something to consider.

I am not writing this post to debate if it is right or wrong to invest in these stocks - each person needs to make this decision for themselves. However, these sin stocks can include some high dividend stocks that should be at least considered.

Get Free Value Line Reports for High Dividend Stocks

One source of good high dividend stocks can be found simply by looking at the Dow Jones Industrial Average. Simply sort the list by yield and go down the list and analyze each of say, the top 5 until you find one with all the right fundamentals that you are comfortable buying. A good source for your research is the Value Line Investment Survey.

Value Line is a stock research company that puts together a very comprehensive analysis of stocks and covers things such as timeliness, safety, and technical aspects of the stock and the company. They make available to everyone a free copy of the report for each of the 30 companies that make up the Dow Jone Index. You can get the copies here.

High dividend stocks still take some detailed analysis before a purchase should ever be made. However, the high dividends can give you some cushion if you buy at the wrong time - you will receive some income from the stock to help offset any short term loses you might suffer. Good analysis is very important to help limit bad decisions.

5 Crucial Metrics to Use When Evaluating High Dividend Stocks

Investing in high dividend stocks is not rocket science. There are certain key items to a companies performance that an investor should use to evaluate if a certain company should be added to a portfolio or not. Although this is not meant to be a full guide to stock evaluation, it is a list of the most important factors that an
investor needs to be aware of.

1. Dividend growth - all investment quality high dividend stocks should show a consistently high dividend growth rate.
2. Earnings per share growth - earnings are what keeps a company in business and paying dividends. Look for companies whose earnings are trending up smoothly instead of choppy.
3. Revenue growth - sales are what bring in the money for a company. They also are an indication of how the products or services of the company are performing in the marketplace. Again, look for revenue that goes up year after year.
4. Cash flow - a company cannot operate without cash. As a high dividend stocks investor you need cash flow to support those dividend payments. Look for positive cash flow year after year.
5. Return on equity - this is how well management of a company does in growing that company into something bigger and more profitable.

There are of course are many other factors that must be considered before buying a share in a high dividend stocks company. However, using the above 5 will provide you with a good basis to move on to further analysis.

Note: Be sure to check out The Dividend Guy Blog.

Watchout for Dividends at Risk on High Dividend Stocks

There is one particular risk that comes into play when investing in high dividend stocks. It is in no way a reason not to invest in them, but is something that an investor must be aware of to be a successful investor. It is called the dividend payout ratio.

To assess if a company's dividend is at risk, you need to look at the dividend payout ratio. The dividend payout ratio is defined by Investopedia as:

The percentage of earnings paid to shareholders in dividends

What I look for is a trend over time of the payout ratio. If a payout ratio is consistently high at 60%, then I do not believe an investor needs to worry about it. But if it has been consistent at 60%, and then jumps to 90% then more research is definitely needed and that companies dividend may be at risk.

This is especially important when you are looking at high dividend stocks. These companies have higher than average dividends and an extra bit of caution needs to be taken to ensure success.

High Dividend Stocks: Dividend Aristocrats

One of the top sources of high dividend stocks ideas for investors is the S&P 500's Dividend Aristocrats' List. Thee S&P High Yield Dividend Aristocrats is designed to measure the performance of the 50 highest dividend yielding constituents that have followed a policy of consistently increasing dividends every year for at least 25 consecutive years. Here is the stocks that are currently on the list:

Ticker Company
ABM ABM Industries
ABT Abbott Labs
ASBC Associated Banc-Corp.
AVY Avery Dennison Corp.
AWR American States Water Co.
BAC Bank of America Corp.
BBT BB&T Corporation
BKH Black Hills
BUD Anheuser-Busch
CBSS Compass Bancshares
CINF Cincinnati Financial
CMA Comerica Inc.
ED Consolidated Edison
EMR Emerson Electric
FHN First Horizon National
FITB Fifth Third Bancorp
GCI Gannett Co.
GE General Electric
HB Hillenbrand Industries
JNJ Johnson & Johnson
KEY KeyCorp
KMB Kimberly-Clark
KO Coca Cola Co.
LEG Leggett & Platt
LLY Lilly (Eli) & Co.
LZB LA-Z Boy Chair
MCD McDonald's Corp.
MMM 3M Company
MO Altria Group, Inc.
MRBK Mercantile Bankshares
MTB M&T Bank Corp.
NFG National Fuel Gas
NWN Northwest Natural Gas
PFE Pfizer, Inc.
PG Procter & Gamble
PNY Piedmont Nat'l Gas
PPG PPG Industries
RF Regions Financial Corp.
ROH Rohm & Haas
RPM RPM International Inc.
SLM SLM Corporation
SNV Synovus Financial
SWK Stanley Works
USB U.S. Bancorp
VFC V.F. Corp.
VVC Vectren Corporation
WGL WGL Holdings, Inc.
WL Wilmington Trust Corp.
WPS WPS Resources
WWY Wrigley (Wm) Jr.

These are all good starting points for further investigation. If high dividend stocks are of interest to you, then do not miss this list.

Good Brokers for Investors of High Dividend Stocks

The key thing in terms of a brokerage account for a high dividend stocks investor is to find one that will reinvest dividends into fractional shares. I have searched high and low, but there are only two that I am aware of. One is in the U.S. and one is in Canada

Canada: The Canadian Shareowner's Association (CSA)

U.S.: Sharebuilder

I personally use the CSA and have been quite happy with them. Again, the real power of dividends comes from the compound growth provided by reinvesting dividends. If you are an investor in high dividend stocks, or are looking to become one, either of these brokers will help you in achieving your goals.

4 Ways to Control Investment Costs in Your High Dividend Stocks Portfolio

Costs are a crucial item to manage in any portfolio, especially in a high dividend stocks portfolio. The impact that trading costs have is huge. Here are 4 ways an investor can control costs in their portfolio:

1. Buy low cost index funds or ETFs that emphasise high dividend stocks. Examples can come from Vanguard or iShares.
2. Select a broker with low trading commissions. There is no need anymore to pay high trading commissions for the promise of higher service as there is lots of low fee brokers who will provide a high level of service.
3. Do not trade excessively in your account. Excessive trading only generates higher fees - if you are a high dividend stocks investor then trading is not the way you want to run your account anyway.
4. If you are going to buy mutual funds (see this article if you are), then only buy no load funds. There are many high quality funds that do not have a front or back end load. You get no added value from these commission based funds that can't get from a no load fund.

I am sure there are other ways to save money in your high dividend stocks account. However, these 4 ways will ensure you don't get hosed on fees by your broker or your account.

Investing in People's Vices Through High Dividend Stocks

There are a lot of high dividend stocks that an investor can invest in. However, some of the highest dividends can be found by investing in companies that cater to people's vices. Here is a list of some "sinful" industries from Investopedia where you will find some high dividend stocks:

* Gambling - Just one trip to Las Vegas or Atlantic City and the extent of just how big a business gambling is bowls you over. In Vegas alone there are numerous casino operators with market capitalizations in the multibillion-dollar range. In addition to the casino and hotel operators, is the less sexy end of the business - maintaining the hardware to keep the casinos full. The industry also encompasses racetrack operators as well as sports betting companies. One thing is clear, gambling is not about to go away anytime soon. If anything, gambling's popularity has soared in recent years with more and more ways to place a bet online.

* Alcohol - The profitability of beer, wine and spirits has been something that companies have been capitalizing on for hundreds of years. While the majority of vineyards are private, there are plenty of brewers and distillers that are publicly traded. In fact, there are now hardly any cities which do not sell brands such as Budweiser and Heineken.

* Tobacco - Despite a firestorm of class-action lawsuits at the end of the millennium and the billions of dollars spent in settlement payouts, tobacco and cigarette companies remain profitable. Even if smoking has become less vogue in North America, the rest of the world continues to puff away. Huge markets remain for tobacco products for the foreseeable future.

* Sex - The sex industry is so enormous and much of it underground, that it is hard to find precise industry figures. But in recent years a number of companies in the pornography industry, condom manufacturing and even makers of drugs designed to enhance a sexual experience have gone public. Just like gambling, the internet brings a whole new dimension to this business. It may be a taboo subject, but there are companies doing very well selling pornography on the internet (though most of these firms are not publicly traded). Even if you ignore the more brazen products like Playboy and Hustler, there are a great many more innocuous industries that benefit from the sale of sex such as hotel and cable operators that make handsome sums from their pay-per-view movies.

* Defense - Although the defense industry represents one of those gray areas that we alluded to earlier, in most circles these stocks are considered sinful. The production of missiles, guns, tanks and fighter jets can be interpreted in different ways - either you view it as destructive and harmful to the entire human race or just to those in the country where the arms are destined, or you may feel that it is simply a proactive measure for protecting one's nation. Regardless of your ethical or moral stance on the issue, there is no debate on the profitability of the manufacture, sale and distribution of military equipment.

The important thing that an investor must be comfortable owning the stock, even if it has a phenomenal dividend track record. If you do not morally agree with gambling or smoking then these stock should not be in your portfolio, no matter if they are high dividend stocks or not.

Reminder: If you are interested in investing in high dividend stocks, then the one book that is a must read is The Single Best Investment: Creating Wealth with Dividend Growth. It will provide you with the background on why this style of investing works and how you can use it in your own portfolio.

High Dividend Stocks and Dividend Reinvestment Plans

There is a way to purchase high dividend stocks without having to open up a brokerage account or paying high commissions on those purchases - dividend reinvestment plans.

Dividend reinvestment plans, or DRIPs as they are often called, are ways and investor can reinvest their cash dividends by purchasing additional shares or fractional shares on the dividend payment date. Most brokerage accounts do not allow you to do this. The power of compounding your dividends year after year can be staggering. Consider this:



The chart paints a pretty amazing picture - reinvesting dividends provides investors with a much high return on their high dividend stocks than not reinvesting them. That is why I choose to invest in stocks that pay dividends.

Quickly Identifying High Dividend Stocks

The hardest part about investing is identifying good quality stocks to buy. However there is an easy way to generate a list of high dividend stocks that you can do further analysis on. It is through the use of the High Dividend Achievers and the High Dividend Aristocrats lists.

Each of these lists presents stocks that have one thing in common; they have a long history of increasing their dividend payments to investors. This is the most powerful concept when considering high dividend stocks.

The difference between the two lists is the number of years a company must have consistently increased its dividend. For the Achievers there must have been 10 years of increases. For the Aristocrats that period of time is 25 years.

Both of these lists are great starting points to develop your list of high dividend stocks. For more info on each list click here or here.

Weak Market Creates Opportunites for High Dividend Stocks Investors

The most recent market slow down has created opportunities for investors, especially those that are interested in high dividend stocks. For investors that search for stocks with higher dividend yields, a down market creates buying opportunities as dividend yields head up as prices go down.

A recent article from SFGate.com presents this viewpoint on this very topic:

The recent market downturn has created buying opportunities for astute investors, especially for dividend stock buyers. Here's why.

The dividend yield for a stock is the return you would achieve over the next 12 months, assuming that both the dividend payout and the share price remain constant for the year.

It's calculated by dividing the expected next 12 months' dividends by the share price. For example, the yield would be 5 percent for a stock currently trading at $100 per share that is expected to pay $5 in dividends the next year ($5 divided by $100). So the dividend yield to new buyers goes up when share prices drop.

Thanks to the weak market, yields on dividend payers with strong fundamental outlooks are higher than they've been for some time.

If you have a watch list of high dividend stocks that you monitor, then the recent market action has provided you with a great opportunity to dip your toes into some shares of those companies. Keep in mind however, we probably have not seen the last of these crazy markets so act slowly and cautiously and think long-term results!

Be Sure to Research Your High Dividend Stocks Before Buying Them

Based on an article published by the Canadian Securities Institute, there is an alarming number of investors who do not do research before buying investments such as high dividend stocks or mutual funds. The article states that 49% of investors did not research their most recent investment, instead relying on the sole advice of their investment adviser. For this reason alone, I still want to encourage investors to read The Single Best Investment: Creating Wealth with Dividend Growth. It is a must own for investors looking to invest in high dividend stocks and ensure their investment brokers are giving them good advice.

Here are a couple of key points from the article:

• Investors understand the importance of investing and the value of investor education. The majority of the respondents (72%) are saving or investing for their future.
• More than half of the respondents understood the importance of key concepts like diversification (64%) when making financial decisions.
• However, most (88%) believe a financial plan is important, but over half (58%) don’t have one.
• Most respondents (92%) agreed on the importance of conducting independent research before investing. However, 49% did not personally research their most recent investment, and 22% invested immediately after hearing about an investment opportunity. Among the 44% of those who didn’t personally research their most recent investment, 72% bought the investment solely on the advice of their financial adviser

To invest successfully, even if you use a broker, you must ensure you understand on some level what your broker is buying for you. A thorough education on investing concepts is important. When it comes to high dividend investing, the best resource is The Single Best Investment: Creating Wealth with Dividend Growth. This book provides a methodical and realistic approach to investment decisions to help you understand what it is you are buying.

The Most Important Resource for Your High Dividend Stocks Library

If there is only one book you should buy in your education on high dividend stocks, then The Single Best Investment: Creating Wealth with Dividend Growth should be it. The key concept in this book is its focus on dividend growth as qualification for stock selection - the higher dividend growth you see year after year, the better.

Dividend growth is when a company raises its dividend it pays to investors holding shares in the company. The concept behind the book is that when searching for stocks, one should be looking for the companies that tend it raise the dividends paid to investors on an annual basis. The impact this has on a portfolio is massive.

For example, lets say you own 100 shares of Coca-Cola and today the dividend per share that the company pays you is $1.36 per share. Each year you would receive $136 in dividends from this high dividend stock. Now Coke has a real habit of raising its dividends every year so lets pretend its 2010 and Coke's annual dividend is $1.57 per share (the dividend was increased 5% each year). Now your 100 shares will be providing you with $157 per year in dividend income. You didn't need to do anything for it, just ensure that Coke still met your investing criteria.

The Single Best Investment: Creating Wealth with Dividend Growth will teach you how to use this powerful concept to increase your portfolio's income on a yearly basis. I highly recommend it as the first, second, third....book in your high dividend stock library.

Can a Yield Be Too High on High Dividend Stocks?

If you use some of the more popular stock screening software packages in your search for high dividend stocks, you may come across some companies that have yields that are very high. These companies need to be scrutinized very closely.

The question that comes to most people's minds is, when is a dividend yield too high? I would suggest that a dividend yield that is higher than 5% requires special attention. One important thing to note is that I am speaking about high dividend stocks from regular companies such as Bank of America and not things like REITs.

So what if your high dividend stocks have a yield above 6%? You need to look closely at things like what the historical yield has been and if the dividend payed has gone up (or down). You also need to confirm that the payout ratio is fine and has not increased drastically in the past few years. If any of these seem out of whack, then beware!

So what are your next steps? Go and find a good stock screener like the one at Microsoft Moneycentral and start digging for high dividend stocks. Then do some research on a company you know to ensure it is a strong one with a healthy dividend and not just a high one.

Update: If you are new to investing in high dividend stocks, or want to have access to a proven stock selection methodology, then please check out Online Trading for Financial Freedom

How to Invest in High Dividend Stocks

Investing has been a passion of mine and my particular investment philosophy centers around identifying high dividend stocks and adding them to my portfolio. I am constantly on the lookout for tools and techniques that can help me grow my portfolio so that the income it generates will be enough for me to retire on in 5 years.

Many of my friends and family have asked me repeatedly to post my tips and techniques on how to invest in high dividend stocks. This website is a culmination of the tips and techniques that I have put together over the years.