The 8 Rules Of Dividend Investing


wealthymattersDividend 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. Read more of this post

Historic Sensex Ratios


wealthymatters,comMemory 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:

1.For P/E link

2.For P/B link

3.For Dividend Yield link

Edward Zajac – 94 year old investor


This is a story I came across in the Economic Times.It seems to be a reprint from Bloomberg.I have this story pinned to my notice board just to remind me how Dumb Money can become Smart Money.Here is a person who seems to have made good money without trying to become an expert at investing.He has accepted his lack of expertise and found a way to benefit from the expertise of the “smart money”.His method involves just looking at some basic facts before putting his money in a company.The skills required are really basic.The rest of his magic merely seems to be a result of compounding due to his Time in the Market and the wisdom that comes from experience.To follow him we don’t need to understand financial statements or master technical analysis.

 Buy & hold strategy not dead yet for 94-year-old investor

wealthymatters.comNEW YORK: Stick with stocks, says investor Edward Zajac. He should know. The 94-year-old has been trading for 72 years and said he’s made about $2.5 million.

“I am a live, open-hearted investor,” said Zajac. “I’m willing to hold that stock 5, 10 years, if I have to.” Zajac, who lives with his daughter in Henderson, Nevada, bought his first stock, Petroleum & Resources, in 1937 while attending the University of Illinois. He’s invested full-time since 1968, after retiring from installing computer systems to travel the US in a recreational vehicle with his wife. Read more of this post

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