If you invest in individual dividend growth stocks, then you know that there are inherent risks in buying individual stocks. That is why I advocate a basic core portfolio of index funds before venturing into individual stocks. With this structure in place, you drastically reduce the individual stock risk you take on by buying dividend growth stocks. That being said, there are things an investor can do to help their individual dividend stock performance. One in particular has to do with dividend yield.
One suggestion that many investment advisers give, including Charles B. Carlson in his bookThe Little Book of Big Dividends: A Safe Formula for Guaranteed Returns, is to analyze dividend yield in comparison to other companies in its industry. What we want to see is that the dividend yield offered by one company is not way out of line with the dividend yield of that company’s peers. If the yield is a lot higher, then there is a lot more risk and that company and perhaps you should consider putting your money elsewhere
Source: The Dividend Guy
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