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CATEGORY Investing

The Smart Way to Trade Dividend Stocks

March 05, 2017

One of the easiest ways to collect yearly dividends is by trading the Dogs of the Dow, or the top 10 Dow stocks that have pulled back the most, but still have incredible dividends. About 75% of the time, they’ve made investors a great deal of money since 1996. In 2016, that rate of success increased to 80%.

You simply buy the Dogs at the start of the year, collect dividends throughout the year, and cash out by the end of the year. Granted, some names may be worth holding indefinitely, like Pfizer (PFE), which carries a yield of 3.9% and Merck, which carries a yield of 3.2%.

Others on the list for 2017 include:

  • Verizon which has a yield of 4.6%
  • Chevron, which has a yield of 3.80%
  • Boeing, which has a yield of 3.12%
  • Cisco, which has a yield of 3.38%
  • Coca-Cola, which has a yield of 3.48%
  • IBM, which has a yield of 3.11%
  • Exxon Mobil, which has a yield of 3.64%
  • Caterpillar, which has a yield of 3.24%

Or, you can look at stocks that have historically increased their dividends over the years without ever pulling back on that. You can look at stocks like Dover Corporation (DOV), which has a yield of 2.2%. It’s been raising its dividends for 60 years.

Procter & Gamble (PG) has a yield of 2.96% and has raised dividends for 59 years. Emerson Electric (EMR) has a yield of 3.18% and has raised the yield for 59 years. Even Coca-Cola (KO), which is a Dog of the Dow, too. It pays a yield of 3.48% and has been raising that rate form the last 53 years. Why am I making such a big deal out of the stocks that have done the best job of increasing their dividends? Simply put, dividends provide you with income.

So how can you zero in on the most promising dividend stocks? Well, first off, seek healthy, growing, promising companies -- because any payout on a stock will be tied to the success of the underlying company.

Focus on the dividend yield, not the dividend amount; Take note of how rapidly each dividend is being increased over time. Be wary of huge yields. Sometimes a really big dividend yield reflects a company going through a tough time.


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