Investing today in the best blue chip dividend paying stocks could drastically improve your quality of life 15 or 20 years from now. Too often, the casual investor is more focused on short term gains and returns then on proper asset allocation. While there is a place for riskier short term investments like stock options and other assets, this type of investing should not overtake an entire portfolio.
One way to stay focused on building a solid long term cash machine of dividend stocks is to define a set of guidelines or better yet, a strategy. A dividend growth investors’ strategy should include both exit criteria as well as stock selection guidelines that can be followed.
As I work towards defining my dividend growth investment strategy, I am starting to detail my stock selection criteria. One of the first guidelines I will use to narrow down potential investment opportunities is to leverage published lists of dividend stocks.
Start with a Published List of Dividend Paying Stocks
As a fairly new dividend growth investor, I am working to define a strategy to build a solid income portfolio that can withstand any type of economy (even a strong recession). This strategy will include a list of criteria that I can use to identify only the best blue chip dividend paying stocks available. As an inexperienced investor in the past, I got caught chasing the highest yielding stocks only to learn my lesson the hard way.
With so many dividend stocks available, it can be nerve wracking trying to identify the best investment options for your portfolio. This is why it is so easy for investors to run a stock search looking for only the highest dividend yields, which can get them in trouble. If you take a closer look at stocks with the highest yields, you will find that these are some of the riskiest investments around.
One criterion that I will be adding to my dividend stock selection process is to look at published lists of dividend paying stocks. I am not talking about any list out there, but ones that have a strong track record for identifying the best dividend paying stocks.
The S&P 500® Dividend Aristocrats list is one of the more well known published indexes for income stocks and one I will be using in my selection criteria.
What is the S&P 500® Dividend Aristocrats List?
According to the S&P 500®, their dividend aristocrats index “… measures the performance of large cap, blue chip companies within the S&P 500 that have followed a policy of increasing dividends every year for at least 25 consecutive years.”.
New income investors looking for the best dividend paying stocks should be able to leverage a list such as this to start identifying quality investment opportunities. A company that has historically raised its dividend annually for at least 25 years is a good indicator of how the company is managed and run.
There are currently over 50 different stocks that are included in the S&P 500® Dividend Aristocrats, which gives plenty of options to start building an income portfolio. The list is updated annually (each December) with new companies making the list while dropping those that have not increased their dividends over the past year. There are plenty of well known names to start with like Coca-Cola Co (KO), McDonald’s Corp (MCD), and Wal-Mart Stores (WMT).
To view the published list of S&P 500® Dividend Aristocrats, visit their website to find out more about the best blue chip stocks.
Other Published List of Dividend Paying Stocks
Many experienced dividend growth investors use a combination of dividend stock lists to further diversify their portfolio. The US Broad Dividend Achievers Index and the U.S. Dividend Champions are a few other notable list that have potential stocks to fit your portfolio. Using these lists can be a huge time saver and prevent an investor from having to sort through thousands of stocks to get to the best.
It is important to note that while these lists of dividend paying stocks can help to narrow down the best investment options, additional research should be done. By no means should investors use these published lists as an immediate buy order. Other factors and criteria should be added to further narrow down ones buy list.
Investing in the Best Long Term Dividend Stocks
As I start to build an income portfolio of dividend paying stocks from scratch, I plan to focus initially on the S&P 500® Dividend Aristocrats. The stocks included in this list should be enough to initiate positions in 5 to 10 stocks over the next year or so. As I work to streamline my strategy and continue to improve my selection process, I may decide to open up my screening to some of the other common lists.
As I mentioned earlier, leveraging this list will only be a portion of my selection criteria. I will narrow down my own list by adding additional criterion to help pick stocks that fit my portfolio.
How much success have you had selecting dividend stocks from some of the more notable published lists?
Related posts:
- How to Find the Top Dividend Stocks
- How to Select Dividend Paying Stocks by Looking at the Current Yield
- How to Use the Dividend Growth Rate to Select Income Stocks
- How to Invest in Dividend Paying Stocks
- What is the Best Investment Option – CD’s or Dividend Stocks?
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I’m a big fan of dividend investing, however it’s important to be realist about the dividend payout a company can offer. Investors expecting a company to continually paying out double digit dividends are susceptible to getting burned. But if you’re smart and invest in solid companies, you can establish a nice fixed-income strategy in your portfolio.