Dividend Investing

Dividend investing is an easy way to earn passive income. A $10,000 investment in a stock with a 5% dividend yield will provide you with $500 in yearly dividend income – all without you doing anything! So this is like an easy way to FIRE, which also stands for Financial Independence Retirement Early.

In fact, the best dividend stocks can boost your total returns over time through a combination of dividend payouts and stock price appreciation. Think of, an enhanced compounding effect!

But not all dividend stocks are a good investment. For example, a stock with a very high dividend yield might turn out to be a dividend trap.

Criteria for Choosing Dividend Stocks

So now, there are 5 indicators that helps us identify a good dividend stock

Company Fundamentals!

Apart from financial metrics, ask yourself if the company has a fundamentally strong business model. Look out for companies with sustained revenue and profit growth, healthy cash flow, and a robust economic moat or competitive advantage. After all, a company with declining revenue and profit is unlikely to have much cash left to distribute as dividends.