Stock market investing is full of unpredictable vicissitudes. Have you ever felt that excitement after a sudden rise or the anxiety after a sudden fall? What type of investor are you?
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Do you enjoy the rollercoaster experience of short-term investment or settle down for the long haul? If you are long-term investor, stock price fluctuations will not affect your investment. Dividend stocks are directed towards long-term capital appreciation. If you invest in dividend stocks, it is time to get maximum benefits out of your investment.
How to gain regular profits with your Dividend stock investments?
- Highest yields are not always the best: Most of the experienced fund managers prefer dividend stocks with future growth. Their focus is to invest in stocks with better growth potential such as technology, material, and energy funds. These stocks receive higher valuation as compared to high yielding stocks such as real estate investment funds and utilities.
- Steady dividend growth is the key to capital appreciation: The best strategy for long-term capital appreciation is to invest in stocks with steady growth in dividend streams. Investors can gain handsome profits depending upon their initial purchase price of the stock. You should invest in such stocks for at least 10 years to receive significant benefits.
- Keep an eye on rising rates: Every dividend stock investor should keep an eye over the rising interest rates. Dividend paying stocks require higher yields to remain competitive with the climbing bond yields. An increase in interest rate can even affect defensive sectors such as telecommunications and utilities.
- Non-traditional stocks can offer excellent profits: The technology sector has emerged as one of the best payout stocks in the market. Leading tech giants including Intel, IBM, Microsoft, and Apple have been offering excellent dividends to their investors. With the end of the financial crisis, you can even consider stocks of financial institutions and banks for better return.
- Dividend rebuilders are good for long-term investments: A lot of companies suffered major losses during the economic slowdown. Investing with companies that are rebuilding their payouts is an excellent strategy for long-term gains. One of the major rebuilding sectors includes the financial stocks, which are boosting their payouts at an impressive rate.
- Choose overseas stocks from emerging markets: Emerging markets offer excellent dividends on various stocks as compared to their US counterparts. You might have to pay a dividend tax of up to 20 percent depending upon the taxes imposed on U.S. investors. Use a taxable account to recover the money paid in taxes under foreign tax credits.
Pay attention towards dividend fund strategies: It is important to study the investment strategy of your fund. Dividend-focused mutual funds use different strategies where some fund managers eye for high yield and others look for strong future growth in dividends. Choose fund that focuses on companies with a consecutive increase in the dividend payouts.