Things To Consider Before Investing in Dividend Stocks
Though dividends offer investors regular income, there are 1certain factors you need to consider before picking such stock. Here are a few factors that you should consider while investing in dividend paying stocks:
- Analyse the company: The company must be financially strong. You may find companies paying high dividends but check the debt levels of the company. Even though the dividend pay is high and the debt levels are high, it can be a red flag. Don’t make decisions based on the dividend yield only. Analyse the business model, financials and future prospects of the company.
- Analyse the sector It is crucial to analyse the sector the company operates. You must check if the sector is highly volatile and dependent on regulatory compliance like the pharma sector. The fluctuations of the sector may impact the dividend payouts which eventually affects your income. Be sure of the sector you select and understand the risks associated.
- Check the dividend payout A consistent dividend payout can indicate that the company is financially healthy. This means the company is constantly growing, is well-managed and has long-term stability. Even if the dividends increase by a small number, the compounding effect can grow the investment. Therefore check the payout history.
How To Invest in Dividend Stocks?
Investing in dividend-cap stocks via Angel One is easy. Simply follow these steps:
- Log in to your Angel One account.
- Click on the search icon and look for your desired dividend stock.
- Now, place your buy order. Simply click on the ‘Buy’ button, enter your desired quantity, and select the order type.
- To complete your transaction, click on the ‘Buy’ button.
If you don’t have a Demat account with Angel One, you can open one for free online within minutes.
