How to Identify the Best Dividend Paying Stocks

There are hundreds of trading companies that offer pretty reasonable rates of return on their investments. Stocks can be categorized under the tabs of high profit, medium profit and low profit margins. But it is not that simple, high profit stocks have the highest risks involved with them, and the low profit stocks are the quite safe.

Everyone wants to use high yield stocks to earn maximum profits at a minimum possible risk. It can be achieved no doubt but it requires great skill. Chasing after high yield stocks right from the word go is not the way to go, particularly for a new investor.


  • 1

    There are actually two ways to earn profits from stocks: investing in dividends and share price appreciation. Investors interested in earning quick money generally go for the dividend paying stocks. Bonds pay out a specific rate of interest so investors seek out high paying dividends as they offer a constant rate of return on investments.

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    Search for published lists of dividend paying stocks from authentic organizations such as Standard & Poor’s. It can be found on their official website. Look for the list with the heading of dividend aristocrats; it is a great place to learn some of the highest paying stocks in recent years. The best part of the list is that it contains historical data of all large companies for the last 25 years. You should go through the complete list to get an idea of the patterns of different stocks over the course of last few decades.

  • 3

    Install a good stock screening tool in your computer to help you further narrow down your search for the highest paying stocks. You can narrow down the dividend paying stocks by putting in some numbers in your filtering software. For example if you need a minimum yield of 5 % percent and the P/ E ratio to be less than 20, the list of stocks will narrow down to a few dozen.

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    Identify those stocks which are present in both of the above lists and prepare a new list with the stocks which you deem appropriate for your investment portfolio. You should also get to know what other people feel are the best paying stocks by visiting a financial scan website and compare their analysis with your own.

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