High Dividend Stocks

High Dividend Stocks - Protecting Yields and Lowering Risk

2009-09-23T12:08:00.000-07:00

With the recent rash of dividend cuts by historically dependable dividend-paying companies, income investors are finding it increasingly challenging to find safe high dividend yields. Indeed, Standard & Poor's expects 2009 to have the biggest drop in dividend payouts since 1942. The market decline has created many accidentally high dividend stocks, as companies who've maintained their dividend payouts in spite of share price declines suddenly find themselves paying out record high dividend yields. The other edge to this sword is that many companies are slashing their dividend payouts to conserve cash, reasoning that their lower payouts still offer a strong yield, given their lower share price.

In addition, the increased volatility associated with the market's decline has devalued investors' principal, leaving them with less capital to invest, if they choose to re-balance their portfolios.

A useful, conservative strategy that actually capitalizes on the market's volatility to lock in high dividend yields is the Covered Call Selling or Buy/Write technique. The increased market volatility has increased call option premiums, giving investors the opportunity to sell high yield covered calls on many stocks, in effect giving them a one-time "double dividend", reducing their initial investment cash outlay, and also offering them some downside protection. Since no company can cut the premium on their call options, these instruments are tantamount to an "ironclad" dividend. Indeed, the current call premiums are often giving investors higher yields than the underlying stock dividends. So, even if the company does cut its dividend, the investor will still retain the premium from his covered call sale. In addition, a call seller receives the call premium money back into his account upon settlement, (usually trade date plus 3 days).

Covered call writing also gives you the potential for capital gains, in addition to the high yields that you get from the call premium/dividend yield, should the stock be assigned, (sold), at expiration. Investors often sell covered calls that are approximately 5-20% above the stock's current price, giving themselves the potential to realize an additional 5-20% profit, should these stocks rise past the covered call thresholds by the end of the investment term. Given the historic lows that many companies' share prices have fallen to, many traditional value investors feel that they are buying these stocks at undervalued prices, and reason that there's a very good chance of them rising in the future.

To illustrate this technique, let's take a look at the prices for NYSE/Euronext (NYX), as of March 4, 2009 market close:

STOCK COST/ SHARE:$16.36 ANNUAL DIVIDEND:$1.20/SHARE DIVIDEND YIELD:7.33%

CALL STRIKE PRICE:$17.50 CALL PREMIUM:$3.25 STATIC CALL YIELD: 19.86%

CALL EXPIRATION DATE: JAN. 15, 2010 TOTAL STATIC YIELD: 27.19%

TOTAL POTENTIAL ASSIGNED YIELD: 34.16%

As you can see from the yields in this example, this stock's 19.86% call selling yield is 2.7 times its dividend yield of 7.33%. So, even if they were to cut their dividend, the investor in this example would still have nearly 20% downside protection.

If the dividend remains intact, the total downside protection in this trade is 27.19%, equivalent to the total static yield, (the combination of the dividend and call yields). In addition, by selling a call at the $17.50 strike price, approximately 7% above the $16.36 cost/share, this investor also has the potential to for a total assigned yield of 34.16%, making a very compelling case for this strategy.

Trade Summary for this Example:

Breakeven: $11.91

Maximum Share Reselling Price: $17.50

Static Yield: $435.00

Potential Assigned Yield: $559.00

Static Call Yield: The yield realized when the underlying shares are NOT assigned/(sold) at or before expiration. In a "static" scenario, the stock's share price doesn't rise above or close enough to the combination price of the strike price, plus the call premium, to make it worthwhile for the shares to be bought by the call buyer on the other side of the trade. In the above example, the share price would have to rise above or near $20.75, ($17.50 strike price plus the $3.25 call premium), to make it worthwhile for the call buyer to exercise his option to buy your shares.

Total Static Yield:The combination of the dividend yield and the static call yield.

Assigned Call Yield: The yield realized when the underlying shares ARE assigned/(sold) at or before expiration. This normally occurs when the stock's share price rises to or above the combination price of the strike price, plus the call premium, causing the shares to be assigned, (sold), at the strike price, which in the above example is $17.50.

Risks and Limits: As with any investment, there are risks. Obviously, this strategy can't guarantee that these stocks won't decline further in value once you've bought them. However, this value-based, "double dividend" covered call strategy will at the very least give you more downside protection than if you had only bought the stocks outright, and the call premium lowers your cost basis.

Upside Risk: Since this strategy quantifies the upper limit of your profit potential, you should be aware that, even if the stock appreciates far past your strike price and call premium, you'll still be obligated to sell it at your covered call strike price, which places a limit on your profit potential. It's usually wise to research the call's theoretical value in an options pricing model, such as Black-Sholes, before placing the trade, to ascertain the chances of the call ending up in the money at expiration. You should always analyze your static and assigned gains, and breakeven point before placing any Covered call, (Buy/Write), strategy. Many of the online brokers have automated options pricing calculators that simplify this process.

Downside Risk: The biggest risk factor in selling covered calls is that you are putting much more money at risk here than by merely buying a call option. However, research has shown that the odds tend to favor option sellers over buyers.

You should make sure you research any stock thoroughly before executing this or any other strategy.

However, as noted before, if the stock declines past your breakeven, you should be able to offset some of the loss by "buying back in" your sold calls at a profit, and perhaps rolling into a lower strike price call, if you want to maintain your underlying position.

Robert Hauver publishes The Double Dividend Stock Alert, a monthly newsletter featuring high yield strategies for value and income investors. Website: http://www.DoubleDividendStocks.com copyright 2009 DeMar Marketing. All Rights Reserved Worldwide. This article was written for informational purposes only. Readers should not make any investment decisions based solely on the information in this article.

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

High Dividend Stocks Overview

2008-02-27T19:53:00.000-08:00

There was a recent article in the FT that discusses some of the important concepts with respect to high dividend stocks. Here is a snapshot from the article

Dividend Reinvestment Plans (Drips) are a convenient way of using a company’s dividends to buy more shares in the same firm, so generating more dividends down the line. More than half of FTSE-100 companies offer these plans, as do a range of investment trusts, often as part of their regular savings schemes. Similar facilities are also common with unit trusts.

I encourage you to read the rest of the article if you are looking for more information on high dividend stocks.

High Dividend Stocks Takes Diligence

2008-02-20T19:49:00.000-08:00

Investing in high dividend stocks is not something that should be jumped into quickly and without research and education. There is an article from the Motley Fool that discusses the importance of ensuring the future of the dividend will continue to be in tact:

The problem is that not all high-yielding stocks are good investments. Sometimes, a stock's price falls because investors think the company will reduce or discontinue dividend payments. If those fears prove true, those who bought in hopes of collecting a fat dividend often suffer the double hit of losing their dividend as well as a continuing drop in the stock price. Shareholders of Fannie Mae (NYSE: FNM) found that out yesterday, as the company slashed its dividend by 30%.

Finding high dividend stocks is an important first step, but it is important to make sure that the dividend can be sustained in the future.

Searching for High Dividend Stocks

2008-02-15T10:33:00.000-08:00

There are certain mutual funds out there that emphasis high dividend stocks. One such fund, as written about at Forbes.com , is the Ivy Dividend Income fund. In this article, the manager of the fund talks about his approach to looking for dividend growth companies as opposed to just high dividend stocks.

I focus on dividend growth, which is more important than the current dividend yield. Dividends are a long-term commitment from management. Companies that increase dividends every year are showing me that they have confidence in their business plan.

He also makes some interesting comments about the payout ratios for high dividend stocks. Be sure to have a look at the article.

High Dividend Stock Investing - 3 Reasons Investors Love Them So Much

2008-02-06T17:56:00.000-08:00

Though some consider it boring, high dividend stocks investing can still offer great potential return as well. In fact, it is not about getting dividend that matters, but it shows how strong the company is financially.

Effective Management Team

High dividend yield stocks are strong companies which had survived few market crashes. They are so effective that even in matured industries, the companies are still able to grow rapidly. They are the leader in the industries and continuously keep themselves ahead of other competitors.

Besides, most dividend paying stocks are enjoying huge economies of scale in their business operation. Through their visionary leaders and committed management team, they are able to convert every single asset that they own into profits and cash. Else, they won't be able to pay any dividend to shareholders.

Creative and Innovative

In an ever changing world nowadays, companies have no other choice than having productive R&D programs. And high dividend yield stocks ability to catch up with the change in demand and being the first to introduce "new effective things" can be huge advantage.

Other than having in house R&D programs, they can leverage on universities' students for creative and innovative inventions as well. For examples, Samsung sponsors many students projects which then they commercialise it to mass market.

Preferred by Fund Managers

Not all fund managers dare to take extra risk for the additional gain. The reason is simply because if they lose money, their customer will most probably change to other companies. If this happens, they lose their business too. Therefore, they prefer to have strong companies, and being able to pay dividends is a great indication of the good financial health.

As these stocks are popular among fund managers, it provides enough liquidity for you to buy or sell them. Besides, these stocks are visible to the market, which make stock research easier for investors. Since the fund managers are professional in their investment decision, invest in the same stocks as they do is not a bad idea too.

Find out exactly how you can make money in high dividend stocks and become financially free eventually; even if you have full time job at http://www.Stock-Investment-Made-Easy.com/easy-stock-tips.html a step-by-step guide to stock investing for beginners community.

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

High Dividend Stocks Videos from Dividend.com

2008-01-30T17:57:00.000-08:00

I was searching through YouTube.com th other day, looking specifically for videos that covered high dividend stocks. There was not a lot to choose from, but there is a regular video series from Dividend.com that provides a market recap with an emphasis on topics related to dividend stocks. Here is that video:

Overall, not specifically related to high dividend stocks, but interesting none-the-less. Take a look at youtube.com to see what else you can find.

A High Dividend Stocks Screen

2008-01-22T17:48:00.000-08:00

There is a high dividend stocks stock screen that has appeared in an article The Globe and Mail. The screen comes from Sherry Cooper, who has been chief economist at investment dealer BMO Nesbitt Burns since 1983. In the article, she states:

“Blue-chip dividend-paying stocks should be considered in a long-term investment portfolio, including during retirement,” she writes. “The most favourable are those stocks with an attractive yield, a history of steady dividend growth above the rate of inflation, a low payout ratio, and an improving position in the marketplace.” Such stocks are arguably safer than corporate bonds, she says.

In her book, she presents a dividend screen that weeds out the junk and comes up with a list of high dividend stocks that investors can then do additional analysis on. Click this link to see the results from the screen.

Some Resources for Investors

2008-01-11T15:16:00.001-08:00

There are a number of products that are available on the web that provide interesting services, even though they may not be focused on high dividend stocks. Here are a few that you may find interesting:

Successful Systems

Stock Trading Robot

Secrets of Successful Traders

Even if you are only interested in high dividend stocks, these resources can provide some additional education that is never a wrong move!

Even in Bangkok they Recommend High Dividend Stocks

2008-01-08T17:57:00.000-08:00

It doesn't matter what country you are in, High Dividend Stocks seem to speak to investors who are looking for stability and growth in uncertain markets. On a day when even Thai stocks fell 1.63%, a money manager from Thailand had this to say:

Mr Wisit recommended that investors focus on high-dividend stocks, adding that the main SET index was projected to move between 790 and 860 points during the first quarter of this year.

Interesting that the global appeal of high dividend stocks seems to abound no matter what market you are in.

Citigroup: A High Dividend Stock One Analyst Is Recommending

2008-01-02T20:55:00.000-08:00

Citigroup is one of the high dividend stocks I own and it has been beaten up lately due to some sub-prime mortgage crisis. However, one analyst is recommending Citi to investors based on the company's enormous earnings power:

Punk Ziegel & Co. analyst Richard Bove said Wednesday investors should buy shares of Citigroup Inc., based on the company's strong cash flow and international growth opportunities.

"The earnings power of Citigroup is not being recognized in the current price of this stock," Bove wrote in a research note.

Citigroup (C, Fortune 500) shares rose 21 cents to $29.65 in premarket trading. Shares of Citigroup closed Monday at $29.44, 47 percent below the $55.55 price at the beginning of the year.

Bove said, despite weakening credit markets that have cost the banks billions of dollars in mortgage writedowns, Citigroup still provides value because of its geographic and product diversity. Acquisitions in Japan and investments in China should help bolster Citigroup's Asian operations, Bove said.

Bove also said he does not believe Citigroup needs to cut its dividend to retain cash and improve capital ratios. Instead, Bove recommends the banks reduce assets if it needs to bolster capital ratios.

As with all high dividend stocks, an investor needs to be careful to ensure they believe in the fundamentals of the stock. It is not enough just to have a high dividend - it must have a strong business behind it. This analyst seems to think that Citigroup has it.

A Fund that Focuses on High Dividend Stocks

2007-12-28T14:13:00.000-08:00

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

2007-12-11T17:49:00.000-08:00

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

2007-12-04T19:00:00.000-08:00

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

2007-11-18T09:54:00.000-08:00

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

2007-11-12T15:09:00.000-08:00

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.

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High Dividend Stocks: Reinvesting Dividends - Why You Should

2007-11-04T08:27:00.000-08:00

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

2007-10-28T09:00:00.000-07:00

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

2007-10-21T08:07:00.000-07:00

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

2007-10-14T14:30:00.000-07:00

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

2007-10-07T07:44:00.000-07:00

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

2007-09-28T21:36:00.000-07:00

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

2007-09-25T16:43:00.000-07:00

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

2007-09-16T08:50:00.000-07:00

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

2007-09-11T20:09:00.000-07:00

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

2007-09-09T21:03:00.000-07:00

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

2007-09-07T17:15:00.000-07:00

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

2007-09-04T17:10:00.000-07:00

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

2007-09-02T09:01:00.000-07:00

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

2007-08-31T16:45:00.000-07:00

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

2007-08-28T19:27:00.000-07:00

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

2007-08-26T06:17:00.000-07:00

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

2007-08-25T06:47:00.000-07:00

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?

2007-08-24T21:03:00.000-07:00

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

2007-08-24T21:01:00.001-07:00

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.