5 Monthly Dividend Stocks That Will Pay Your Bills

3 years ago
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Top dividend stocks. Best dividend stocks
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5 Top Dividend stocks that can pay your bills with passive income.

Dividend stocks are a great addition to a well-rounded portfolio.

The issue is many investors will make their first investments aiming to get rich as quickly as possible and this goal puts their money at risk.

But, it’s possible to start earning passive income through relatively low-risk stocks.

When researching dividend stocks I look at 4 key parameters.

The first is the dividend yield per month… that’s the amount you get paid back per year, divided over 12 months.

The second is the companies’ dividend payout ratio. This tells us how much of a company’s net income goes to dividends. If the ratio is negative, or above 100, this means money is likely being borrowed to pay shareholders dividends – not a good sign if you’re relying on consistent dividends to pay your bills.

Third is the company’s history of dividend payments. While the past is never a guarantee of the future, we can be more confident that the stock with a track record will continue to deliver… especially if the management can show us that dividends are a consistent part of their financial strategy.

Fourth, it’s important to look at the value a company provides. This helps us determine if a company is likely to perform well in the coming years.

One more thing – even though dividends are a form of passive income, they aren’t risk-free, and choosing to invest in a company with a higher dividend yield is generally more risky…

It’s widely accepted that between 3% to 5% per year is a good range to work with if you intend to use your dividends to cover your monthly expenses…

There are some dividend stocks that exceed those limits, with those you just need to be careful.

You want to see a company using its income to both increase its competitiveness in the market and also reward investors for their commitment.

Don’t assume that a higher dividend yield means that it’s a better stock; some companies will pay high dividends to make up for lackluster stock price movements or other operational issues…

These issues can make the company less profitable in the years to come, leaving you holding the bag .

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*I am not a financial advisor. This is not financial advice*

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