This article was published in the May 2014 edition of the Canadian MoneySaver, and is posted here with permission. For more information visit www.canadianmoneysaver.ca
Although dividend investing can seem overwhelming and complicated, it really doesn’t need to be. Nor do you need to be a financial professional or CPA to make sense of it all. A few red-flags to watch out for, as well as specific ratios to look at, will help you buy a dividend titan instead of a dividend dud.
Here are four key dividend metrics I look at, when initially screening dividend stocks:
Dividend Yield
The dividend yield is probably the easiest metric, and the first place to look. I want to invest in companies that are paying me a reasonable dividend yield for being a shareholder.
The Ninja's rule of thumb is:
A large-cap should never pay more than a 5% dividend yield.
A small-cap should never pay more than a 7% ...
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