How to invest in dividend stocks (for delicious dividends)

Have I told you that I really like getting dividends? Dividends are paid out from companies’ profit, and there’s 2 general ways to do this:

  1. Build your own company and when it’s profitable, issue dividends to yourself
  2. Buy dividend stocks

The easier of the two above is to buy dividend stocks, but of course, the yield wouldn’t be as high as you starting a business and growing it, and the reasons are pretty simple: my own company can earn more with less expenses typically because there’s less employees, and the profit can come to me directly quicker. Issue is, it’s work and take time to build.

Conversely, buying dividend stocks can start paying me dividends in the 1st year itself, but the downsides are it’s less than running my own business, around 2-10% per year average, but upside is that it’s typically passive-passive.


Here’s some basic ways I choose my dividend stocks:

Go through individual stocks already listed in my country’s ETF

Every country has its own ETF, which is a basket of top X amount of public listed companies. Singapore has the STI ETF, US has the S&P and Dow Jone, HK has the Hang Seng Index etc. You can easily find them in the local papers or online simply by using search engines.

Taking this approach means that these companies are already vetted by professionals.


Choose the top 10-15 and look through…

Their profit and loss statements.

As they’re public listed companies, all their financial statements are available to download and view, what you’re really looking out for is…

Remove dividend companies that has red flags

Red flags.

Red flags of any dividend paying companies are:

  1. Erratic dividend percent last 5 years. We dont want them paying $100 this year, $2 next year, $18 then etc. You are looking for consistency.
  2. NOT paying out more dividends than profits, which is a sustainability issue. I rather they payout less than 75% of their profits.

Buy the balance equally AND regularly

By now, you’d have a list of 5-10+ different stocks you can buy, and the trick is

  1. Buy them in equal quantum. So if you have $10000 for 10 companies, allocate $1000 per company. This is make your portfolio balanced.
  2. Regularly means dont just buy once off or try to time the market: set aside budget to buy regularly, be it every month, every 3, 6 or 12 months.
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