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How to Find the Best Stocks that Pay Dividends

By Edited Nov 25, 2016 0 0

Finding stocks that pay dividends is really not that difficult. Run a stock screening tool, search for "dividend stocks" on Google, or just open up the business section of your newspaper and an investor can find several investments that pay dividends. The problem with this approach is that not all dividend stocks are created equal. There is actually a very wide range of these types of investments, which can make the screening process confusing.


Fortunately, there is a way to narrow down the search to find the best stocks that pay dividends. Searching for the best of the best is actually very simple. The single most important piece of data investors should consider when researching dividend paying stocks is a company's dividend history.


If a company has had a strong history of raising their dividend payout annually, there is a good chance this trend will continue. A history filled with dividend increases is also a great sign of how well a company is managed and is positioned to withstand any economic downturn. While looking at what has happened in the past is no guarantee of what will happen in the future, this information is still a positive sign.


Where Can to Find Dividend History Information?

One of the best places to look for companies with a strong history of dividend increases is the S&P 500's list of Dividend Aristocrats. This published list is updated annually and includes stocks that have raised their dividends consistently for at least 25 years. This is the perfect place to start searching for blue chip stocks that pay dividends.


Some of the blue chip stocks that can be found on the list of Dividend Aristocrats includes - Clorox Co. (CLX), Coca-Cola Co. (KO), McDonald's Corp (MCD), and Wal-Mart Stores (WMT). Each of the dividend stocks listed here have actually raised dividends annually for over 30 years. Coca-Cola has been raising dividends for the past 47 years. Over 40 years of consistent dividend earnings is a great signal of an incredible investment opportunity.


Another option to help research the dividend history of a company is by running a FREE report. Financial websites like Yahoo! Finance have a query tool that will allow investors to run a report to export past dividend payouts. This is a great way to research the historic changes in the dividend payout of a company on your buy list. Investors may also want to check with their online discount broker for advanced screening tools offered when opening an account.


Final Thoughts

Dividend history is not the only indicator that should be used to find the best stocks that pay dividends. There are plenty of other factors that an investor should consider before making a decision to purchase a dividend stock. Researching a stocks dividend history is, however, the most important piece of data that is used by dividend growth investors. The past dividend performance of a company can provide the most helpful and accurate information about a stock.


The next time you are thinking of investing in a stock that pays dividends, make sure you check out their history first.

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