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Use these 6 criteria to select high-dividend stocks!
Many robust investors pay more attention to high-dividend stocks. Companies that pay dividends all year round tend to be more stable in terms of operation, but also provide investors with stable cash flow returns.
So how do you find a high dividend company? We can filter from both aspects of the company's dividend distribution situation and the fundamentals.
When it comes to dividends, many people only look at the dividend yield, the higher the dividend yield, the better. In fact, the high dividend yield could be due to a significant drop in the share price, or some cyclical companies have increased their payout after the peak of the cycle, which is likely unsustainable.
When investing in high-dividend companies, we also need to focus on the stability of stock prices and the continuity of dividends. As such, as long as the dividend yield is in a relatively high range (e.g. 2% - 5%), we need further focus on the growth of dividends, including a CAGR of not less than 5% and a growth duration of not less than 5 to 10 years.
In addition, in terms of company fundamentals, we also need to focus on the stability of the company's performance. The size of the company can not be too small, the market capitalization is best above $10 billion. The company's net profit is best kept growing for 5 consecutive years or more than 10 years. The growth rate does not need to be too high, but it is best not to be less than 5%. At the same time, companies need to have sufficient short-term solvency, so the current ratio should be greater than 1.
