Dividends4Life: Keys to Finding Good Dividend Stocks

Keys to Finding Good Dividend Stocks

Posted by D4L | Tuesday, June 19, 2012 | | 0 comments »

In my portfolio I try to mix in a few high yielders (+7% yield) that also have a good chance for stock price appreciation. Given the low yield world in which we currently live in, high percent yields catch our attention, but finding these potential high returners can require a lot of work and patience, as differentiating value from a value trap is difficult. In addition to the traditional criteria of earnings growth, a strong balance sheet, and plenty of operational cash flow, below are three of my keys to identifying high yielders:

1. Entry Points: Entering high yield stocks at the right time to capture not only the dividend but also potential stock price appreciation is critical, 2. Insider Buying: For me, this may be the most important indicator when analyzing high yield stocks and when combined with point number one gives good insight into potential future returns and 3. Dividend History: While the dividend history is no guarantee of future performance, it does give a picture of the company's commitment to returning capital to shareholders as well as insight into how the dividend has performed over the course of entire business cycles.

Source: Minyanville

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