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.