If you invest in good paying dividend stock 2013 then you can enjoy monthly of quarterly income payments as long as you hold the dividend paying shares. If you want create a form of passive residual income then dividend paying shares will help you do this. In this article we look at how you can create a well diversified dividend portfolio using fundamentally strong companies and enjoy regular monthly and quarterly payments from the investment. I have included a list of top monthly, quarterly and fundamentally strong companies that all pay dividends.
Top Paying Dividend Stocks
List of Dividend Paying Stocks
Your first step is to create a portfolio of dividend stocks that also have options available. To start with you can make a watch list of ten stocks that you want to potentially hold in your dividend portfolio. When you pick the ten dividend paying stocks you need to analyse them using fundamental analysis, you need to check the companies policies, profits, revenue, PE Ratio, debt, leverage, sales and management; if you really believe that the companies fundamentals are good you can go ahead and invest in the stocks. Remember that this is a buy and hold strategy, if you’re stock starts falling you must have faith that your analysis will prove you right.
Highest Paying Dividend Stocks for 2013
Monthly Dividend Paying Stocks
Most stocks will pay quarterly however a handful of stocks will pay monthly, one of the best ways to continually strive to increase your income is to re-invest any money that you receive in dividends, the monthly compounding effect is better than the quarterly compounding effect and will help your income grow faster. If you can continually invest in buying more shares in the dividend paying companies as well as re-investing the dividend payments you will reach your desired income levels faster.
Best High Dividend Stocks and Hedging
Insure All Your Dividend Stocks Using Options
If you’re risk averse then you might not want to see the price of your stock or value of your portfolio from falling. If that is the case you can implement a strategy which will guarantee your capital at the current level without effecting the dividend payments. Once you’ve created your portfolio you can hedge or insure each stock using a yearly put option, this means that whatever happens in the market you’ll always get your money back for a period of one year. Usually these yearly put or insurance policies are quite expensive however if you can sell or write monthly covered calls you can recoup the cost and you’ll only be left with monthly dividend payments and no capital depreciation.
The Ideal Scenario for Dividend Paying Stocks
Monthly Income Without Losing Capital
The perfect ideal situation would be as follows, you buy a dividend trading stock after fundamentally analyzing the company, you have faith in it and when the price goes down you buy more. You then insure the stock at the price you bought it using a yearly put option that is at the money. The cost of the insurance policy is $2.4 so you start to sell or write covered calls at 0.2 cents or more to recover the cost. At the end you’ve paid for the insurance through writing the call and your left with stock that never depreciates and only goes up in value.