April 2, 2018

Why Dividend Paying Stocks are Best for Long Term


Dividend paying stocks are stocks that pay monthly dividends to shareholders.  It is the percentage of the earning the company is sharing with the investor. Want to know the best dividend paying stocks for the long term to invest. There are many highest dividend paying stocks that provides high dividend yield in the next 5 years and for long term. We have scouted through some quarterly dividend paying stocks, annually dividend paying stocks, best yield dividend stocks stocks last 5 years and dividend paying penny stocks. Here is the result of our search. The goal is to search and identify the best dividend stock to invest for long term.

Why dividend paying stocks

Dividend paying stocks means that the company will give dividends to the shareholders every year. These dividends are not taxed up to 10 lakhs per year and Government will charge 10% on the excess amount exceeding 10 lakhs.

Dividend yield = annual dividends / current market price. It is a way to measure how much cash flow you are getting for each rupee invested in an equity position.

Why dividend paying stocks are good

Dividends means money. Money is always good right. Dividend paying stocks fetch good serious money while your stocks increase in the company and the if there is a good share growth. Let us compare the 30 companies that paid dividends to shareholders. The image provides average dividend per share for the last 5 years and average dividend yield.

dividend paying stocks coal india

Eg: Coal india dividend yield 7.85 means for each 100 inr worth of coal India, you will be getting 7.85 inr dividend each year.

Not just that on the course of the time, share price will grow, thereby increasing your dividends. Now you know why dividend paying stocks are best for long term.

Why buy dividend paying stocks

Investors prefer dividend paying stocks because it can provide you a good regular income and that income will increase if there is a good share growth.

companies provided handsome dividends to shareholders

why invest in dividend paying stocks

I told you all the reasons why you should invest in high yield dividend stocks. These stocks provides you assured passive income. I can share more details of dividend paying stocks and why you should pick the right stock.

Companies with net profit and highest dividend yield for the last 5 years

Source: getmoneyrich

When to buy dividend paying stocks

You should buy dividend paying stocks that will grow in in long term. We have used the screener tool to screen such stocks and we come up with a formula.

Dividend yield > 2 AND
Average 5years dividend > 0 AND 
Average return on capital employed 10Years  > 15 AND
Sales growth 5Years > 10 AND 
Average return on capital employed 5Years  > 15 AND
Average return on equity 10Years  > 15 AND
Price to Earning < 20  AND
Price to Earning > 1 AND
Debt to equity < 1

Here are the results.

Why Dividend Paying Stocks for Long Term

Read more: 78 Best Stocks to Buy for Investing in Stock Market

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