Now Is a Great Time to Be a Dividend Investor. Really.
Today is an excellent time to be a dividend investor. That may be hard to believe coming on the heels of 2008 and 2009, two of the worst years ever for dividends. How bad? About one out of every eight stocks in the Standard & Poor’s 500 Index reduced or eliminated the dividend in 2008. Approximately 15 percent of the companies in the S&P 500 Index cut or omitted dividends in 2009, the highest level ever.
So why do I think there are tremendous opportunities in dividend-paying stocks? Partly because of the massacre of the last few years. A stock’s yield is determined by two things—the dividend and the stock price. If a stock price declines, its yield increases (provided, of course, that the company continues to pay the dividend). When stocks were crushed in 2008 and early 2009, the huge price declines lifted dividend yields to levels that, in many cases, I have not seen since 1982.
High dividend yields are only part of the bullish story. Because stocks fell so much in 2008 and early 2009, prices reached ridiculously low levels. Even with the market’s rally beginning in March 2009, it is not uncommon to see stocks trading below prices they fetched a decade ago.
The bottom line is that when you consider their bargain-basement prices and high dividend yields, dividend-paying stocks are as attractive today as they have been in nearly three decades.
But how do you find these opportunities?
Recipe for Dividend Riches
If you want the recipe for getting rich in the stock market, here it is: Find stocks with above-average appreciation potential and safe and growing dividends, and buy them at attractive prices.
My book, The Little Book of BIG DIVIDENDS (John Wiley & Sons), along with this Web site, shows you how to do just that. My book is a blueprint for successful dividend investing. In the book, I walk you through the basics—what a dividend is (and isn’t); why, how, and when companies pay dividends; and why some companies pay big dividends while others pay no dividends at all. Order The Little Book of Big Dividends here.
I also discuss the importance of size and safety of dividends when considering dividend-paying stocks, and I provide you with a simple yet powerful formula for finding Big, Safe Dividends (BSDs). This formula takes into account factors most critical to the safety and growth potential of a company’s dividend.
As a companion to the book, I have created this Web site www.BigSafeDividends.com. On this site, you’ll find up-to-date BSD (Big, Safe Dividend) scores, Quadrix® ratings, dividend and yield information, dividend-payment schedules, and other relevant dividend data on every dividend-paying stock in the Standard & Poor’s 1500 Index. The site provides literally a one-stop shop for all things dividends and is a powerful tool for researching dividend-paying stocks. And by the way, all the information is provided free of charge.
Time to Get Busy
Finding dividend-paying stocks that will make you rich may not be as easy as shooting fish in a barrel, but the big opportunities are out there. By purchasing my book, and using this Web site, you have upped your chances dramatically of finding them.
Happy hunting.
Charles Carlson, CFA
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