When a company owner makes a profit, he has two options: invest the money or pay a dividend to its shareholders. Because paying shareholders will entice more investors to buy a stake in the company, many decide to pay out a dividend. Not all companies that pay out a dividend are a good choice. It’s important to research the company, its profits, and the many factors that play into its dividend history. Some of the leading experts in dividend investments provide excellent advice for how to choose the best dividend stocks.
Warren Buffett, a successful dividend investor, shares this tip. He bases his picks on dividend payouts that have at least doubled payouts over the past five years. He also looks at payout ratios, recommending those that are below industry norms. Right now, he’s chosen a few stocks he believes will be a positive dividend investment: Wells Fargo (NYSE: WFC) and U.S. Bancorp (NYSE: USB).
Source: Wealth Daily
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