Do Not Use Annual Dividend Yield When Investing

DO NOT MAKE THIS MISTAKE WHEN BUILDING A DIVIDEND PORTFOLIO

I want to cover the grounds on a more philosophical discussion in regards to dividend growth investing… annual dividend yield. A number of investors make a final investment decision only by analyzing a company’s annual dividend yield. This does not always tell you the final picture and can blow up an entire dividend investment portfolio.

Dividend investors tend to track annual dividend yields for companies to determine an investment decision. This is usually done by tracking the annual dividend yield with historical annual dividend yields. If the dividend stock’s yield is higher today than the historical average then it’s a SCREAMING BUY. That can leave a dividend investor in the dust. Wishing they had never invested in that horrible stock. Follow these points when investing and building your dividend portfolio to avoid that one mistake you do not want to make. Our guide to finding undervalued dividend growth stocks is a good start to realize the other considerations before investing.

Do Not Use Annual Dividend Yield When Investing

You can find value in any market. I believe in you.

What is annual dividend yield?

In order to calculate an annual dividend yield, you need to take the dividend payments times the frequency of the payments to arrive at an annual dividend figure. From there, you take annual dividends divided by the stock price to arrive at an annual dividend yield.

There is So Much More to a Company than a Dividend Payout

Annual dividend payments are only a snapshot in time of what a company is paying out now. Many dividend stocks continue to make dividend payments just because they have done so in the past. Is the dividend stock really fit to make those payments now? Has growth slowed recently? What does their balance sheet look like? Let’s be honest. The future is the million dollar question. We’ve helped you with how to forecast the dividend growth rate, but what about forecasting a company’s future in general?