Four simple steps to investing in dividend stocks
There are 4 simple steps to investing successfully in dividend stocks. The steps aren’t hard, but they do take a little work.
Here they are:
Look at the markets
Look at the economy
Study the Industry
Four Steps To Dividend Investing Success Explained
Let me get into these a bit more…
First, Think big.
Your first step is to “Step Back” and look at the bigger picture.
First, ask yourself, how does my next investment fit in with the rest of my portfolio? Then think about what’s going on in the markets? What’s going on in the economy? And, finally, what’s happening in the industry you’re looking at.
You want to use the next investment opportunity to fill holes in your portfolio. So if you’re heavy in oil and Gas, you want to look at something else – like real estate of consumer staples.
The Second Step is to look at the Markets.
Watch the market. If it’s in a downtrend, don’t fight it. Sit tight and wait for a better time to invest.
After you’ve studied the market and are confident it’s not in a downtrend… then it’s time to take the next step.
Step number three, look at the economy.
No sense buying stock when the economy is in the tank.
What you want to do is avoid buying dividend stocks as the economy is ENTERING a recession. Most “Official Recessions” don’t last but a few quarters… so keep an eye out for good deals.
Once you know the market is stable and the economy isn’t starting in a recession, you want to look closely at the Industry.
That’s step number four.
The best example I can give is the oil market. For months and months and months, the lead news stories have been the falling price of oil. That’s a time when you want to avoid investing in oil and gas companies.
Just keep your eye on the industry dynamics and avoid trying to pick stocks in an industry that’s suffering from a major disruption.
By simply asking yourself about these 4 questions… you’ll be able to narrow down the industries that deserve your focus. This will eliminate a lot of good companies that are in a bad environment.
You don’t exclude them forever… you simply put them aside and consider them at a later date.
Now that you’ve narrowed your list of great dividend stocks… what do you do next?
You do your diligence and learn about the companies.
You read their website, you review their documents and press releases. You really get inside and understand the business that you’re buying into… because when you buy a stock you are becoming an owner.
A small owner, but an owner none-the-less.
Once you have studied the company and understand how it operates and makes money, then you want to look at the numbers.
Would you be surprised to learn there are 4 key metrics you want to look at when analyzing a company?
Now, I don’t have time to get into all the details of each of key metrics…
But, what I’ve done is put together a free report – the Ultimate Guide For Investing In Dividend Stocks.
You can download your free copy by signing up here.
In the report, I go over the 10 investing rules in detail….. I’ll expand more on the 4 critical questions we discussed above, and expose the 4 investing metrics you need to focus on!
In addition, I share 13 stocks for a great Dividend Portfolio.
Get your free copy today!