Tips for GOOD dividends

When it comes to investing, few things will perk up a portfolio like dividends. Dividends are like free money. While everyone invests for capital appreciation, dividends are an added benefit. Dividends can not only offset a drop in a stock's price, but when the stock is going up, you're getting the capital appreciation AND the dividends. Ideally, what you want to do is buy good stocks that are low relative to the overall market AND pay good dividends. Happy days are here again! Some investments pays no dividends. Lots of investments pays up to  2 percent. Others pay 4 per cent or more. I will list my favorites later in this article. There are 2 keys to finding good dividend-payers. These are (1) the company's payout ratio and (2) the company's five-year average dividend yield. The first number will tell you the percentage of earnings a company pays out in dividends relative to earnings. A low payout ratio means the company is hanging on to most of its earnings and paying out little in dividends. A high payout ratio means the reverse, the company pays out a large percentage of earnings in dividends. The second number, the five-year average dividend yield, tells you the average dividend percentage the company has paid over the past five years.  But it takes some research and time to discover good dividend payers.The best online tool I have found for finding good dividend payers is Yahoo's financial page (Click here ). Here's how:
(1) Go to Yahoo's financial page and enter the symbol of the stock you want to research.
(2) On the right-hand side near the middle of the page,  click on "More Key Statistics".
(3) On the next page on the right side near the bottom, you will see a heading that says "Dividends and Splits". That's where you'll find the information you want. Ok, go ahead and knock yourself out. Here are my favorite dividend-paying stocks. I am only listing the five-year trailing dividends for each of these stocks based on Yahoo's finance page.
Altria (MO), 4.8%
AT&T (T) 4.4%
Verizon (VZ) 4.1%
Bank of America (BAC) 3.7%
Merck (MRK) 3.5%
Dupont (DD) 3.2%
Wachovia Bank (WB) 3.1%
Remember, it's nice to have a stock appreciate in price, but it's doubly nice to have one that pays a hefty dividend.
There's nothing like FREE money!