Dividend Investing Tips

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Dividend Stocks Research
Dividend Investing Tips
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• Hi, My name is Aaron and Im with Dividend Stocks
  Research, today were reviewing our recently
  published article

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• Dividend Investing Tips

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• He was wearing a Yankees cap, a crisp Brooks
  Brothers tie, and an Armani Collezioni
• Core Gio Two-Button suit.

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• Just give it to me straight, he said in a voice
  shaped by serious net worth. What are the three
  things you look for in dividend stocks?

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• It was chance encounter at a busy restaurant in
  Terminal 1 at LAX where the tables were jammed
  together like seats in economy class. He
  overheard a phone call I was having with my
  editor.

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• Exactly how he figured out I wrote about dividend
  stocks remains a mystery. I guess he was a
  pretty good eavesdropper.

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• But finding the best dividend stocks doesnt have
  to be a mystery.
•  Sure, we will always invest in a market where
  not much of anything is a given.

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• We cant predict the markets direction and we
  will always be tossed surprising developments.
  Economists didnt forecast the financial meltdown
  in 2008. Experts didnt tell us to strap in for
  the collapse in crude oil prices.

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• And more often than not, all you can depend on is
  your own common sense to make a safe investment.
  So let me tell you what I told the mysterious guy
  at LAX.

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• Let me give it to you straight and reveal the
  three things I look for in dividend stocks.

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• Dividend Stocks Essential 1 Good Management

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• Lets strip it all down to the bare bones basics.
  You only get paid a dividend when a company
  makes more money than it needs.

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• The company needs to pay its employees, its
  bills, pay down its debt, cover operating
  expenses, capital expenditures, and maybe set
  some cash aside for a rainy day.

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• It might also need to sock some money away to
  fund a future acquisition, or to expand. So there
  are plenty of places for the money to go before
  we can expect to be paid a dividend.

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• And obviously, theres got to be money coming in.
  Sales need to be higher than expenses. So,
  whats the best way to try and make sure all this
  happens?

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• Good management. Management that knows how to
  make money, spend money wisely, lead the
  business,and grow the profits. How do you know if
  a company is well managed?

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• Its not easy. Sins can be covered up. Artfully
  hidden balance sheet time bombs can be ticking
  away. Read the CEOs letter to shareholders in
  the annual report. Decide if what he says makes
  sense at a very basic level.

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• If the company has a challenge, is he addressing
  it head on and explaining his strategy for fixing
  it?

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• Do you like the direction he plans to lead the
  organization? Is he vague or specific? Does he
  accept responsibility for previous problems, or
  does he gloss them over?

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• Go to the financials. Look at how money is being
  spent. Is the management team running a tight
  ship? How much are expenses going up? Are they
  growing more quickly than revenues?

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• And when you look at the numbers, zero in on the
  profit margin. You want to see if the margin,
  the percentage of profit, is rising or falling.

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• When you see margins that arent growing, chances
  are you see management team thats not getting
  the job done.

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• And when profit margins arent growing, sooner or
  later, the dividend will be in trouble.

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• Dividend Stocks Essential 2 A Good Track Record

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• Dividend stocks with good management teams tend
  to come with a pretty good track record. These
  companies make it through rough times. They
  continue to pay the dividend no matter what.

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• They look ahead, and they adapt to changing
  business environments. For example, this year,
  weve seen the surge in strength of the U.S.
  dollar make it tough for companies that do a lot
  of business overseas.

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• Companies with a good track record arent
  strangers to this sort of disruption.
•  A great way to find the best dividend stocks is
  to look at the Dividend Aristocrats.

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• These are big companies with terrific track
  records when it comes to paying dividends. Theses
  companies have paid a growing dividend for at
  least the past 25 years.

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• When the dividend is cut, the company is tossed
  off the list. Track records matter. So you wont
  find well-known companies like General Electric
  GE on the Aristocrats lineup, because GE cut its
  dividend a few years back.

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• But heres what you will find.
• Little-known, but fairly large companies like
  Nucor NUE, Leggett Platt LEG, and Illinois
  Tool Works ITW.

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• When you look at companies like these, youll
  find the best dividend stocks for a rainy day.

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• Dividend Stocks Essential 3 A Simple Way To
  Keep Making Money

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• Will marketers who want to advertise on mobile
  devices still be spending a billion dollars a
  month with Google five years from now? Tough to
  say.

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• Will people still be using toothpaste and laundry
  detergent in five years?
• Thats probably a safer bet, and its why Procter
  Gamble PG has been paying a growing dividend
  since 1957.

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• Take a look at how the stock has done over the
  past 20 years...

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• Im giving you this 20-year chart so you can get
  a feel for the long-term ups and downs. Do you
  see the hit Procter Gamble took in 2000? The
  stock lost half its value in just a few months.

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• But it kept paying the dividend. And it kept on
  selling toothpaste and laundry detergent.

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• If the Procter and Gamble stock takes another hit
  like it did fifteen years ago, we should feel
  fairly comfortable with its ability to rebound.
  The company knows how. Rough waters will not be
  uncharted waters.

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• Procter and Gamble competes in a simple business.
  You dont need brilliant engineers like the
  people working for Google.

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• But you do need the ability to understand your
  customer if youre going to be profitable in the
  consumer packaged goods business.

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• Understanding customers, and being in front of
  trends, isnt always easy. But companies like
  Procter Gamble know how. Thats why PG is one
  of Americas top dividend stocks.
•  

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• A few other fairly simple businesses with solid
  dividend paying stocks...
• Coca-Cola KO and PepsiCo PEP.
• Coke has been paying a growing dividend since
  1963 and Pepsi since 1973.

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• Simple Companies Can Give You Dependable Dividend
  Stocks

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• And it can be simple for you to find the best
  dividend stocks when you look for the three
  things I look for. Good management, a good track
  record, and a straightforward business model.

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• Thats what I told the guy who cornered me in
  Terminal 1 at LAX. And by the way... That Armani
  Collezioni Core Gio Two-Button suit he was
  wearing... 1,995 off the rack at Saks Fifth
  Avenue.

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