Investing in dividend stocks is a powerful and safe method for building wealth. Then practice what you’ve learned with our free stock market simulation.
Best Dividend Stocks
Here are some superstar dividend stocks from the Motley Fool. These stocks are actually part of the famed group of Dividend Aristocrats, companies that have raised their dividend for at least 25 years in a row.
|LOW||Lowe’s Companies Inc.|
|WBA||Walgreens Boots Alliance|
|O||Realty Income Corporation|
|JNJ||Johnson & Johnson|
What Are Dividend Stocks?
What is a stock dividend?
A stock dividend is essentially a dividend payment made in the form of additional shares instead of the typical cash payout. If a company’s tight on liquid cash, it may decide to distribute dividend stocks to shareholders instead. They’re typically acknowledged in the form of fractions paid per existing share owned. Depending on the company, the payout frequency of their dividend will differ.
The shareholder can keep the shares and hope that the company will be able to use the money not paid out in a cash dividend to earn a better rate of return. Alternatively, the shareholder could sell some of the shares for cash. The biggest benefit of a stock dividend over a cash dividend is that shareholders don’t have to pay tax on it. If a stock dividend has a cash-dividend option, then tax does need to be paid (even if the shares are kept instead of the cash!)
How do stock dividends work?
A stock dividend is kind of similar to a stock split, in that a company will issue new shares to shareholders in proportion to their shares outstanding. A stock dilution of 25% or greater is considered a split. Stock splits simply reduce the par value per share of stock outstanding. In contrast, stock dividends require the shifting of retained earnings into the company’s capital stock account, which reduces the cash available to pay out classified as a dividend. Cash paid out that is greater than retained earnings is classified as a return of capital.
Stock dividends are typically in the 5% to 15% range. If a company pays a 10% stock dividend, it means that each shareholder will receive one new share for every ten shares they own. After the dividend is paid out, a shareholder with 100 shares will then own 110 shares.
Finding Dividend Stocks To Buy
Dividend stocks are appealing to both passive and active traders. A good dividend stock has a high yield but can also be bought at a good price. If you can’t get the stock at the price you want, wait. Or look for another opportunity. Stock prices are constantly fluctuating, so new opportunities arise every few weeks. Use a tool like FinViz to screen for stocks that meet your dividend criteria.
BEST STOCK NEWSLETTER (November 6, 2021 UPDATE)
The Motley Fool Stock Advisor has won our Award for the Best Stock Newsletter for the last 4 years.
We have been tracking ALL of the Motley Fool stock picks since January 2016. That's over 5 years and over 120 stock picks. As of Friday, Novermber 6, 2021, 19 of their 24 stocks picks from 2020 are up and the average return is 106% compared to the SP500's 50%. Take a look at some other FACTS about their service:
- The average return of their 24 picks from 2019 is up 108% compared to market's 68%; and 20 of those 24 are profitable
- Of their 24 stock picks from 2018, 20 are up, the average return is 248%, and 11 have more than doubled in price
- From 2017, all 24 of their stock picks are up, 12 have more than doubled and the average return is 254%
- And from 2016, 20 of 24 are up, 17 have more than doubled and the average is an amazing 451% ( thanks in part to them picking SHOP)
- So the point is that not every one of their picks goes up, but the longer you hold them, the better they have performed, at least since 2016
- Tesla (TSLA) picked January 2, 2020 before the crash and it is up 1,320%
TIP FROM THE AUTHOR: If your portfolio is not up 233% over the last 5 years with 84% profitable trades, then you are investing missing out on big profits. Be pro-active and buy stock tips from this trusted source instead of being re-active and buying stocks that everyone else is buying! A subscription to the Fool will probably be the best investment you ever make. They already have over 1,000,000 subscribers.
Normally the Fool service is priced at $199 per year but they are currently offering the next 12 months for just $99 on THIS NEW SUBSCRIBER PAGE.
GET UP TO $1,000 IN FREE STOCK
WHEN YOU OPEN A ROBINHOOD BROKERAGE ACCOUNT
Robinhood was the first brokerage site to NOT charge commissions when they opened in 2013. They just past 10,000,000 accounts and to celebrate they are offering up to $1,000 in free stock when you open a new account.
Here's the details: You must click on a special promo link to open your new Robinhood account. Then when you fund your account with at least $10, you will receive one stock valued between $5 and $250. Then, you will get a link to share with your friends. Every time one of your friends opens an account, you will receive another free stock valued between $5 and $250. Click here to learn more about this Special Robinhood offer.
(before it's too late)