Evaluating a Dividend Paying Stock

To achieve great success, purchase and hold top dividend paying stocks for decades while reinvesting your dividends. But how do you identify these quality companies? This page will teach you the important financial ratios used to evaluate dividend paying corporations.

These ratios will help you to scan and research for potential dividend achievers and to quickly gauge their financial health and profitability.

Let me ask you something...

Before you buy a house to live in what would you do first? You would probably check out the condition of the place wouldn’t you? Does it need a new roof? How is the foundation? What about the neighbourhood?

You get the idea...

It’s the same thing when investing in dividend growth stocks. Have a look at their financial parts to see if they are worthy of your hard-earned investment dollars!

What are these parts we speak of? I’m glad you asked! You can click on the headings below for a detailed explanation of each.

Debt to Equity Ratio

This ratio tells you how much debt a company has on its balance sheet as a percentage of its equity. Too much debt is dangerous when times get tough.

Dividend Payout Ratio

This is another key statistic to know. It tells us what percentage of a company’s profit is being paid out in dividends. If the company pays out too much, it won’t have any left to invest for growth.

Return on Equity (ROE)

This valuable statistic tells you how efficient a company is at using the money invested from shareholders to generate profits. The higher the ROE, the more efficient the company!

Price to Earnings (PE) Ratio

This ratio will help make sure you don’t pay too much for a dividend champion! It tells you how many times earnings you would be paying at the current market price for a given company. The price you pay is everything!

Ok, now that you have clicked and read through all of the above you’re ready to move on. Next, we’ll outline our criteria for selecting dividend paying stocks. Here, you will learn what to look for in a potential dividend aristocrat.

Let’s keep moving you are doing great!

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