How To Invest In Dividend Stocks In 2020

  1. Settle On A Goal: The first thing aspiring dividend stock investors will want to do is settle on a goal. Determine exactly what you want out of the stock market and develop a plan around your endgame. There’s no way to gauge success or failure without the backdrop of a control. Determine how much money you want to make within a certain timeframe, and start looking for companies that might get you closer to your goal.

  2. Compile A Watchlist: Once you know where you ultimately want to be, it is time to pick the road to take you there. Instead of a literal road, however, the path will be paved with dividend stocks. It is at this point you will want to compile a watchlist of potential investment candidates. It is always a good idea to invest in industries you are acutely familiar with. Stick with what you know and investing will be a lot easier. However, it’s never a bad idea to listen to successful investors, too. Find out what today’s most successful investors are talking about and add the companies to a watchlist.

  3. Screen Each Stock On Your Watchlist: This is the step that separates good investors from bad ones. If for nothing else, it’s not enough to simply like a dividend stock—investors need to know why they like a stock. Build a thesis as to why you should invest in a company. Look at everything from its previous performance to the people managing the business. Pay close attention to the price-to-earnings ratio and the debt. There are countless things to look at before making a decision, so don’t act impulsively. Only once you like everything you see should you even consider adding a stock to your portfolio.

  4. Decide How Much Of Your Portfolio You Want The Stock To Be: Starting a position in a new dividend stock isn’t as simple as putting all of your free cash into it. Instead, it’s always a good idea to start a small position and build up to a larger percentage of your portfolio. Typically investors will want to keep each holding to around 5.0% of their portfolio, but there’s nothing wrong with opening a smaller holding and building it up over time. That way, investors are less susceptible to buying at peak prices and may be able to average down over time.

  5. Diversify: No investment is guaranteed. The best investors are right slightly more than half the time. However, it only takes a few good calls to cancel out all the poor ones. As a result, investors will want to diversify their holdings. It is not wise to put all your money in a single stock. Instead, spread your capital out over somewhere between 10 to 20 stocks. That way, a single bad call won’t tank your entire portfolio.


Learning how to invest in dividend stocks doesn’t carry the same level of excitement as some of today’s most promising growth stocks. After all, growth stocks are the ones making all the headlines at the closing bell. Nonetheless, there’s absolutely no reason to ignore the highest paying dividend stocks with proven track records. While they may not be as exciting as tomorrow’s newest tech IPO (initial public offering) or a game-changer in the electric vehicle industry, dividend stocks are mostly dependable and entirely capable of serving as the foundation for any portfolio. Learn how to invest in dividend stocks today, and years of compounding reinvestments will most likely make your future self a lot more financially secure.

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