The 3 Best Ways To Invest In Dividend Stocks

There are many advantages to investing in dividend stocks. In the last issue I covered the basics and outlined some of the perks of investing in them.

But let’s start off today by going over the three prime ways to invest.

1. Buy Shares Directly in the Company with a Brokerage Account

You might want to keep this separate from your trading account. And You can use any good broker … TDAmeritrade, Charles Schwab, Fidelity and others.

2. Buy Exchange-Traded Funds.

A lot of good ones focus on indexes of stocks that pay dividends.

They include an ETF for dividend-paying stocks in the S&P 500. But it doesn’t have the S&P 500 stocks that don’t pay dividends. Therefore, the dividend yield is higher than the usual S&P 500 ETFs and index funds.

Some ETFs focus on utility stocks, which all pay dividends. And you can buy ETFs of foreign stocks that pay dividends, including foreign consumer stocks, utilities and real estate.

That’s an easy way to diversify your portfolio so you’re not dependent on the good ol’ United States dollar.

3. Enroll in a Dividend Reinvestment Plan (DRIP).

Many mature companies sponsor these plans to encourage people to buy and hold their stock. They keep your stock for you, like a brokerage would.

You can get started with small amounts of money, from $25–$200. That’s a big advantage over brokerages. If you can afford only a fraction of one share, that’s okay.

You earn the same dividends as every other shareholder. They’re automatically reinvested.

But they don’t charge you transaction fees, either to open the account or to buy additional shares by reinvesting dividends. That’s another major advantage over a brokerage account.

What a lot of people do with DRIPs is open the account, then forget about it (except to add more money) for 30 years.

Types of Dividend Stocks

Many dividend stocks provide consumer goods and services. These range from Hershey and Wrigley to Bank of America.

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Christine Mark 10 months ago Member's comment

Dividend stocks distribute a portion of the company’s earnings to investors on a regular basis. Most American dividend stocks pay investors a set amount each quarter, and the top ones increase their payouts over time, so investors can build an annuity-like cash stream.

Some of the best ways to invest in Dividend Stocks -

1. Invest in dividend stocks through ETFs.

2. Find a broadly diversified DIVIDEND ETFs.

3. Analyze the safety of the dividend.

4. Invest in individual dividend stocks.

Alexis Renault 10 months ago Member's comment