DIVIDEND STOCKS

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:

SymbolCompany
JNJJohnson & Johnson
WFCWells Fargo & Co.
XOMExxon Mobil Corporation
DUKDuke Energy Corp.
TAT&T Inc.
WELLWelltower Inc.
BXBlackstone Group LP
KMIKinder Morgan Inc.
SOHOSotherly Hotels Inc.

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 OF 2020, September 27, 2020 UPDATE

TWO (2) of this year's Motley Fool Stock Picks Have Already QUADRUPLED, ONE has TRIPLED, and 2 more have DOUBLED in just 9 Months!

We have been tracking ALL of the Motley Fool stock picks since January 2016. That's almost 5 years and 114 stock picks. As of Friday, September 25, 2020, TWO of their 2020 stock recommendations have already quadrupled (ZM and TSLA), another one has tripled and 2 more have doubled (SHOP and NVTA all in just the first 9 months of 2020.

In addition, 7 of their 2019, 9 of their 2018, 9 of their 2017 and 12 of their 2016 picks have also doubled. Best of all, over the last 5 years the average stock pick is up 144%. That beats the SP500 by an average of 106%. And that's even accounting for all of this COVID mess that has wreaked havoc on most stocks. BUT, the Fool has done so well because they have quickly identified stocks this year that will perform well in the post-COVID world. THAT is how the Fool consistently does so well--they adapt and constantly pick stocks before everyone else realizes the opportunities.

  • Zoom Video (ZM) – April 16, 2020 pick and it is already up 230%
  • Shopify (SHOP) – April 2, 2020 pick and it is already up 177%
  • Zoom Video (ZM) – March 19, 2020 pick re-recommended and it is already up 301%
  • DexCom (DXCM) picked Feb 20, 2020 right before the market crashed and it is still up 33%
  • NVTA picked February 6, 2020 is up 102%
  • Tesla (TSLA) picked January 2, 2020 before the crash and it is up 373% 
  • HubSpot (HUBS) picked December 5, 2019 and it is up 92%
  • Netflix (NFLX) picked November 21, 2019 and it is up 55%
  • Trade Desk (TTD) picked November 11, 2019 and up 146%
  • Zoom Video originally picked Oct 3 and it is up 546%
  • SolarEdge (SEDG) picked September 19, 2019 and it is up 125%

Now, no one can guarantee that their next picks will be as strong, but our 5 years of experience has been super profitable. They also claim that since inception, their average pick is up 529% and now we believe them. Many analysts are saying that we have passed the bottom of this COVID crisis and "certain" stocks will recover quickly and be the new leaders. So make sure you have the right stocks in your portfolio.

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