High Dividend Investing: Key Points You Should Know

Moomoo Learn joined discussion · May 24 05:07

Whether aiming for high returns or seeking stable incomes, dividend stocks may be a favored choice for investors to build their portfolios.

These assets allow for a more passive approach to investing, providing steady income without paying much attention to timing the market.

What are the key points to consider in high dividend investing?

1. Dividend Yield and Payment Calendar

The dividend yield is calculated by dividing the dividend per share by the stock price, and dividends are normally paid quarterly.

2. Duration of Dividend Growth

Speaking of dividends, some investors focus solely on dividend yield, assuming higher yields are better.

However, excessively high yields may be an attempt to boost a falling stock price or driven by a company's temporary profits in a cyclical boom. However, these practices may not be sustainable.

When considering investing in high dividend-paying companies, we also need to pay attention to the sustainability of dividend growth.

How do you quickly find companies with high dividend yields?

There are three tools to help with high-dividend investing:

1. High Dividend Yields. You can find out the stocks with the highest dividend yields in the market page on the ranking list.

2. Dividend Calendar. Here you can find detailed information regarding past or future corporate dividend payments. You can select dates using the「Filter」, and the data chart will update in real-time based on your selection.

High Dividend Investing: Key Points You Should Know

3. Historical payouts Records: You can find detailed data about a company's dividend payments over the past 5 years.

What are the main factors affecting the dividend yield?

1. Net profit is crucial; the more a company earns, the more it can afford to distribute as dividends.

2. Cash flow is also important; there must be a net inflow of cash to sustain dividend payouts.

3. The payout ratio, or the percentage of net profit paid out as dividends, indicates a company's willingness to distribute earnings.

4. Lastly, the stock price or valuation, being the denominator in the yield calculation, means that all else being equal, a higher stock price results in a lower dividend yield.

What are the potential benefits of high-dividend investing?

The potential benefits of high dividend investing are mainly twofold. It generally offers shareholders stable and generous dividends, providing a steady stream of cash flow for personal use or further investment.

Furthermore, companies with a history of consistently high dividend payouts are often perceived as operationally sound and fairly valued, traits that tend to attract value investors and lead to greater stock liquidity.