Investing in High Dividend Stocks

By Eric Hammer

High dividend stocks used to be considered the perfect "grandma investment." They were the kind of stocks your elderly grandmother held in her portfolio because while they didn't appreciate nearly as much as some other stocks, they also tended not to lose as much value and they provided a nice little income in the form of dividend checks distributed to investors each year.

However, as the market has become increasingly volatile, it's become a bit more fashionable to consider investments in high dividend stocks as a way of making real money in the stock market. The idea is to find stocks that will at least hold their value and are likely to grow, if more slowly than some other stocks, while at the same time paying out respectable enough dividends to earn good money from them even if the growth doesn't necessarily happen.

Keep in mind however that like all forms of stock investing, high dividend stocks are not without risk. A company could lose money for a year and pay nothing in dividends (dividends are only distributed if there is profit left over after the cost of running the business is subtracted). The principle could lose value as well if that happens, so it's not a risk free investment by any means.

In fact, whereas high dividend stocks used to be considered safe if boring investments, today they can be just as volatile as any other kind of investment.

How Much Can You Make?

As with any stock investing strategy, it's simply impossible to predict how much, if anything you could make by investing in high dividend stocks. If you make the right picks, your returns could be huge. However, making the wrong picks could cost you dearly as well.

Ways to Make More | Related Opportunities | Tips

Remember that this is not a get rich quick scheme and it's not something to jump into with your eyes closed, hoping for the best possible outcome. You need to do your homework on any stock investments you are interested in, even when you invest in high dividend stocks just as you would if you invested in anything else.

Read up on a company's fundamentals - what are they investing in and why are they able to offer those high dividends? What is their market outlook? Is there heavy competition in their field?

One area where you will often find high dividend stocks is in REITs (Real Estate Investment Trusts) because the law requires that they disburse money that isn't spent. However, as we all know, the real estate market has been hurting lately and there are no guarantees that REITs will do well enough to be paying out dividends (though things do look promising for the medium term).

Qualifications / Requirements

All you need is the ability to read stock charts and to spend plenty of time reading about a company's fundamentals. If you are able to understand an earnings report, then you are qualified to invest in high dividend stocks. Of course the other thing you'll need for this is money so be prepared to invest when you find the company you are interested in.

First Steps

Start by reading more about high dividend stocks at the resources below. Then, do your homework - research companies that you are interested in investing in and figure out if you believe they are ready to continue growing. Finally, make an investment and be prepared to wait out short term ups and downs.


Check out these helpful resources to learn more about high dividend stocks:

Dogs of the Dow - An investing advice site which offers some tips on which stocks they believe will go up in value and which are also high dividend stocks.

Dividend Detective - A website devoted to finding the best high dividend stocks for investment. They give away some content for free, however the best stock tips are available only behind a pay wall.

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Every Way to Make Money | Investing in High Dividend Stocks