When it comes to investing we are all after a single thing - profit. After all, what is the point of giving a company your money if they are not going to grow that investment and put more money back in your bank account?
We all know we want to make money with our investments. We have all seen the books, infomercials, and websites that promise overnight gains of monumental proportion. So, if these tactics work, why isn't every investor using them? The short answer is that get rich quick schemes rarely result in participants generating any real wealth.
So, what is the answer to making gains in the market without trying every new scheme that comes along? Which companies offer the best passive income opportunities to investors? The answer to both of these questions is to invest in companies that guarantee a quarterly payment to investors.
Dividend Stocks
One very effective way to accumulate profits in the market is to invest in dividend stocks. These stocks are generally offered by well established companies that have already proven their profitability. For the investor that means adding stability to your portfolio, and in a sense, guaranteeing income.
Dividend stocks pay investors a set amount each quarter. The most choice companies of this sort increase those dividends over time, allowing investors to generate an ongoing revenue stream. NerdWallet compares this to having an annuity that pays on a regular basis, helping you grow your wealth.
The two ways to invest in dividend stocks are through buying individual stock shares of particular companies, or through a mutual fund that invests in the stocks for you. Each method has its own pros and cons, and a conference with your broker is a great way to learn about them. The main difference between the two is that purchasing individual companies means you have more legwork to do. However, by investing in a mutual fund you can instantly diversify that investment to several different companies with a single transaction.
Choosing The Best Stocks To Buy
There is more to selecting a stock to purchase than just finding out if they pay dividends. Knowing how stable the company is beforehand is valuable when making an investing decision. Some companies pay larger dividends than others. Some companies will not suit your personal portfolio goals. Talking with a broker and getting the information you need ahead of your investment is essential to success.
You need to have specific goals for your investment portfolio. If you intend to use it to build towards retirement and you have twenty years to accomplish that, a more stable, long term plan is the best option. When you design your portfolio to hold stability over time by investing in well established companies that pay dividends, you lower your risk of loss due to market downturns.
However, if your goal is to move profits quickly, you may have to take a more aggressive approach. This means you might be looking at investments in startups and companies that are more at risk when the market takes a downward swing. While there is nothing wrong with taking risks, they should be taken only when you have sufficient knowledge to help offset the risk. Have a plan in place to protect your investment in the event of problematic market movement.
Simply Safe Dividends has a list of stocks they recommend as companies that are worth investing in ahead of a market downturn. The list includes companies like Magellan Midstream Partners L.L.P (NYSE : MMP),Duke Energy Corporation (NYSE : DUK), and Consolidated Edison, Inc. (NYSE : ED). These are all companies considered to be well guarded against market downturns in 2023.
High Dividend Stocks
We have included here a list of five stocks that pay high dividends to their investors. Some of these companies will almost certainly be a match for your own personal portfolio. Make sure to talk to your broker before deciding which ones to invest in, as information is power when it comes to investing.
Pioneer Natural Resources Company (NYSE : PXD) tops the list with shares trading at $227.02 at the time of writing.Their annual dividend is currently at 11.10%, which is a nice return on any investment. Zacks states that the company could be undervalued at its current price and lists it as a stock that is perfect for value investors.
Altria Group, Inc (NYSE : MO) takes the second slot on our top five investment choices for dividend stocks. Currently shares are trading at $46.19 and the annual forward dividend is 8.13%.
V.F. Corporation (NYSE : VFC) is our third choice, with a dividend of 7.83%. Shares are currently trading at $25.98. This company makes a nice investment at a low cost per share that can guarantee a regular passive income.
Verizon Communications Inc. (NYSE : VZ) makes the fourth entry in the list. With shares trading at $39.06 and an annual dividend of 6.80%, the company is a healthy investment for anyone looking to buy into dividend stocks.
Kinder Morgan, Inc. (NYSE : KMI) rounds out our top five choices for dividend stocks. The company is currently trading at just $18.02 per share. However, it offers a steady dividend of 6.12% to its investors.
Why You Should Invest In Dividend Stocks
Investing in dividend stocks makes perfect sense if you want to generate passive income. Fidelity also says that "dividends can provide not only income, but they may also accelerate the payback on investment." Investing in these companies has the potential to grow your earnings at a faster pace than stocks that do not pay dividends.
Dividend stocks offer a sort of safety net for your portfolio. No one knows for sure how a stock's price will fluctuate over time. This is the nature of investing. However, investing in a dividend paying stock can help offset any losses should the shares dip in value at any time.
As you can see from the list above, investing in a dividend paying stock doesn't mean you have to dig deep into your bank account to cover the initial purchase. While it is true that higher value shares will pay more in actual dollar amounts, the lower cost options are a great way to gain experience with investing in these types of stock.
So, what are you waiting for? Get your broker on the phone and start investigating your options to find out if one of these companies is a good choice for your portfolio.
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