WARNING… Don’t Buy The Wrong Blue Chip Dividend Stock
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Are you looking for great dividend stocks? Do you feel like you’re looking for something mythical… something that might not even exist?
Maybe you’ve been checking out REITs and are disappointed by their performance. Or you looked at small caps and aren’t happy with the performance you’ve seen.
What about blue chips? Have you taken a look?
Remember, Blue Chips are the cream of the crop.
According to the New York Stock Exchange, blue chip stocks are issued by companies that represent quality, reliability, and the ability to operate at a profit no matter what the economic conditions.
But you’ve got to proceed with caution. Extreme caution, to make sure you’re not making the mistake of associating a big name with big dividends.
Not all blue chip stocks are created equal.
You see, only a handful of blue chip dividend stocks come with a track record of rewarding investors with growing dividends.
Remember, reputations don’t pay regular, growing dividends. In fact, most blue chip stocks on the Dow Jones Industrial Average, the bluest of the blue, have been unable to maintain a consistent record of dividend growth.
Just look at their performance over the last few years!
So as a dividend investor, you’ll need to look beyond the usual suspects to find the undiscovered stocks that will generate a reliable stream of dividends.
You need to look outside the boundaries of the 30 Dow Jones blue chip stocks.
Finding stocks that pay dividends is not difficult.
In the fourth quarter of 2013, companies paid shareholders a record $80.6 billion in dividends. And total dividends paid in 2013 were more than $330 billion.
This was a staggering dividend payment growth rate of 11.8% over 2012 levels!
It would be nice if we had this kind of dividend payment growth year after year.
Unfortunately that’s just not the case… unless you focus on one particular group of stocks.
I recommend you start to explore the S&P 500 stocks that consistently deliver dividend growth.
The Search For Dividend Blue Chips
This search begins, and for many investors comes to an end, with the Dividend Aristocrats. These are companies in the S&P 500 that have increased their dividend payouts for 25 consecutive years.
These are perfect companies to start your research with. Investors interested in maximizing current income through dividends need to look at mature companies where cash flow is strong.
When you look at these mature companies, you’ll find a little something extra waiting for you. Something special.
The Special Bonus Of Dividend Blue Chips
That little extra is the total return!
Total return is the growth of your investment when investors combine capital appreciation with dividend income!
Most investors believe money is made through capital appreciation.
The fact is, over time, most of the money is from dividends.
Consider this fact… A broad equity index for the years 1871 through 2010 delivered an annualized total return of 8.8%. Dividends delivered 52% of this total return.
See how important dividends are!
But the greater return isn’t the only benefit.
You also get lower portfolio volatility with dividend stocks. You see, there’s fewer wild swings in price year to year. And while any company can have a rough year or two where investors suffer a loss, you’ll never experience a negative dividend.
The worst that can happen is the dividend can get cut.
So what are the best Blue-Chip Dividend paying stocks to own right now? I’ll give you a list of my top 7 next week!
Category: Dividend Stocks
