The 8 Rules Of Dividend Investing
November 11, 2019 Leave a comment
Dividend investing involves accumulating stocks that issue dividends to generate a steady stream of passive income.
Rule #1: The Quality Rule
Invest in high quality businesses that have a proven long-term record of stability, growth, and profitability. There is no reason to own a mediocre business when you can own a high quality business.Rank stocks by dividend history and corporate history ,the longer the better. Stocks must have paid steady or increasing dividends through the worst periods of financial stress and turmoil to be eligible for inclusion in your portfolio.
Rule #2: The Bargain Rule
Invest in businesses that pay you the most dividends per rupee you invest. All things being equal, the higher the dividend yield, the better. Additionally, only invest in stocks trading below their historical average valuation multiple to avoid investing in overpriced securities. So rank stocks by dividend yield. Only stocks trading below their say 10 year historical average valuation multiple are eligible for inclusion in your portfolio.
Memory has its limitations.If ever you want to step back and go over historic P/Es,P/B and Dividend Yields of the SENSEX to get a better grip on things, here are the links:
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