Dividend Investing: Concise Edition

This is a popular strategy now and is expected to be so for the next 20 years. We have a lot of retirees who depend on incomes from investments. The low interest rates in CDs and bonds drive these folks to dividend stocks. Here is a simple screen to find these stocks. First find the stocks that have dividend rate more than 2% (about half of the S&P 500 stocks). Take out those sectors that give dividends as a return of equity (REITs and many partnerships). Eliminate the stocks with bad...
More Description

This is a popular strategy now and is expected to be so for the next 20 years. We have a lot of retirees who depend on incomes from investments. The low interest rates in CDs and bonds drive these folks to dividend stocks. Here is a simple screen to find these stocks. First find the stocks that have dividend rate more than 2% (about half of the S&P 500 stocks). Take out those sectors that give dividends as a return of equity (REITs and many partnerships). Eliminate the stocks with bad fundamentals such as high expected P/E, high debt (compared to companies in the same sector), etc. Next ensure they should have a good history of maintaining or increasing dividends (i.e. dividend growth). As of 5-2014, it has been working for the last five years if you also follow my article to skip the bank stocks, the drug companies, the miners, the insurers and small foreign companies. The stocks with good dividends fluctuate less in prices. However, when a strategy is over-used, it may not work anymore (see related chapter). There may be a mild bubble on these dividend stocks (due to too many followers). We will discuss how to protect our dividend portfolio. In addition, we should not buy (actually should sell) stocks during a market plunge. I will describe how to detect market plunges and corrections. Since 2000, we have two market plunges with an average loss of over 45%.There are at least three major ways to receive dividends:1. Dividends given to stock owners (registered on and before the ex-div date).2. DRIPs, Dividend Reinvest Plan.3. Covered Calls (Chapter 21). You can receive dividends while 'renting' your stocks.I will skip those stocks (REITs and partnerships) that return capitals as they would usually depreciate the stocks. This book started with Market Timing. When the market is going to plunge, most stocks including dividend stocks will lose values. Hence, do not buy any stocks and even sell most stocks when you receive the exit signal. Updated 11/2016 75 pages