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What Everybody Ought to Know About Investing in Dividend Stocks

by John Schroeder

A common misconception of investing in the stock market is that it takes a lot of money to get started. We already know that you can start buying stock for as little as $10 a month. You don’t need thousands or even hundreds of dollars to invest. Even if you don’t have a lot of capital, it is possible to invest small amounts of money to get you started.

Another misunderstanding of investing in the stock market is that it takes too much time. While it certainly is important to spend time building your portfolio – there are tools that can make things easier.

For example, we can leverage automatic investment plans to save time each month buying stocks. DRIP’s and direct stock purchase plans help investors save on commissions and can also help automate the investment process. Online apps like Personal Capital can allow you to monitor all your holdings in one easy platform.

Investing in Dividend Stocks

Start dividend investing portfolio

Dividend investing doesn’t have to be difficult.

Investing in dividend paying stocks is a proven way to grow your portfolio over time. But when it comes dividend investing, many people don’t know where to start looking for stocks to invest in. Guess what? There are helpful tools for that as well. This is probably one of the hardest problems dividend investors have when they first start out.

Fortunately, we have some great tools at our disposal for getting started! One such tool is the Dividend Champions list of stocks. I have been using this resource to search for new investment ideas. The publication also offers a wealth of dividend data for the stocks that it tracks.

This resource has saved me a lot of headache when it comes to investing.

What are Dividend Champions?

The Dividend Champions are a list of stocks maintained and published by Dave Fish that meet certain requirements. The first criterion to be included is that the stock must be traded in the US. Secondly, the list only includes companies that have increased dividends for a minimum of 25 consecutive years.

This type of criteria may already sound familiar to some. For example, the S&P 500 Dividend Aristocrat list only includes companies that have raised their distributions for 25 consecutive years as well. The one big difference is that dividend aristocrats must meet other criteria – one being a member of the S&P 500.

The dividend aristocrat index is a great place to start looking for potential investment ideas. However, it is limited in that it filters out a lot of great dividend paying companies. As a dividend investor myself, buying stocks that are part of the S&P 500 is not all that important to me. However, investing in a company that has shown steady dividend growth rates by consistently raising their dividends for over 25 years is.

Dividend Champion Stocks Recap

  • stocks traded in the US
  • increased dividends for 25 consecutive years
  • no minimum trading volume
  • updated every month
  • free for investors to use

For more information on the list of stocks, check out – U.S. Dividend Champions.

Another difference between the dividend aristocrats and the dividend champions list is how often they are updated. The aristocrats are updated once at the end of each year. A company that freezes or cuts its dividend during the year potentially may not be removed from the list for several more months.

The dividend champions on the other hand are updated monthly.

Helpful Dividend Data

In addition to the list of stocks, the dividend champion publication includes a ton of helpful financial data to help investors. For example, I can tell that one of my current holdings (Cincinnati Financial – CINF) has raised its dividend for the past 54 years! I can also tell that the last dividend increase was 4.7%. This is something I could certainly calculate on my own. However, calculating the last increase for all 18 of my holdings would take some time. I can quickly use the dividend champion list to scan this information to monitor my current holdings.

Final Thoughts

In summary, the list of dividend champions is a great resource for investors. It can provide a starting point for investors looking for their next stock pick. I have found it to be an excellent tool that can uncover new investment options for my portfolio.

The dividend champions list has also saved me a lot of hours when it comes to monitoring my current holdings. The monthly updates to the list and the relevant financial data for each company allows me to quickly monitor my current stocks.

Do you use any published list of stocks to pick the companies you invest in?


Published or updated February 25, 2014.
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{ 1 comment… read it below or add one }

1 Jon @ Money Smart Guides

I’ve heard of the Dividend Aristocrats but not the Dividend Champions. I’ll have to check it out. It does make sense to follow closely as you mentioned, a company can cut its dividend and the Aristocrats list won’t let you know about it until the end of the year after missing out on possible dividends.

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