Dividend Stocks

Investing In Stocks For The Sake Of Cash Flow

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5 Dividend Stocks to Buy in 2012

Posted on | September 25, 2012 | Comments Off

Investing in dividend stocks can be a smart and beneficial way to earn money. The key is to know which stocks to invest in! You want your portfolio to be rich with productive stocks, those that are going to pay out well while you sit back and count the money.

What to Look for Before Investing:

If you are buying on your own, you need to look at some key things before investing in a dividend stock. Check out the company’s figures, including income statements, cash flow numbers, and the balance sheet.

You want to learn how to find certain formulas that will let you know if the stock is a high yielding one or not. Some of the things you will want to know are earnings per share, price to earnings, and dividend per share.

You also want to make sure the company is profitable; make sure they have rising dividend payments over time and strong fiscal strength. Sometimes a company’s longevity is a good indicator as well, especially in a tough economy. Think about what they do – is it something that will stick around?

Another key that is important to many people is to agree with what the company represents, in other words, its ethics. You are buying a piece of it, so even if it is a high profit company, some people like to make sure their values match those of the company. If this is your criteria, some companies, like Forbes, have a social value ranking.

Think about this - how long do you want to hold on to the stock? Some people like to go for quick and dirty, others slow and steady. Think about longevity or current trends when making your decision. These things do have a strong impact.

Above all, make sure the company is making a profit and pays out well. Don’t buy into it thinking it may make money at some point; you want to see some hard evidence that this is a profitable company.

Here is a look at some of the top dividend stocks to buy this year:

  1. Procter & Gamble – With a high yield and increased management spending on dividends, Procter & Gamble has held strong over the years. This stock is open to new investors. A well-trusted company, P&G is a leader in many household brands like Tide, Charmin, and Bounty.
  2. 3M – Like P&G, 3M has held strong over the years and has also increased its per share cut over the years. This is another high yield, fairly stable stock. Well known for its tape and Post-it Notes, 3M is a worldwide manufacturer of hundreds of products.
  3. Thomson Reuters – Named by Forbes as one of the top 25 dividend stocks, this leading source of business information could be a smart purchase. With a strong profit and strong dividend history, it may be worth checking out.
  4. Norfolk Southern Corp – Another Forbes pick, this company was named one of the Top 25 Socially Responsible Dividend Stocks. Not only is this shipping and transportation company a strong value stock, but it also meets a list of social criteria including diversity and the impact of the company on society.
  5. PepsiCo – With strong staying power and a list of successful products in addition to Pepsi sodas, including Gatorade, Quaker Oats, and Frito-Lay products, PepsiCo is a smart buying choice and continues to show above average returns. A world leader for decades, PepsiCo is a company with consistent high revenue worth taking a look at.

Heather Legg is an author who writes on a variety of topics, including budget-friendly family tips, finances, and investing.