How do general investors pick out the best dividend stocks in Australia? While some strategies are relatively obvious, there are common practices that should be employed to make clear decisions and protect the client’s best interests.
1) Set Aside Time for Research
The best dividend stocks in Australia won’t present themselves to new investors at the first glance or even inside the first hour. What might appear like a quality prospect today could be something that delivers diminishing returns later that week. While this domain involves less market volatility as common stock options go, the top operators will ensure that they set aside time for research purposes, following the right advice, reading content, watching trends and investing in their own IP before making informed decisions.
2) Hold Conversations With Stock Specialists
Being able to pinpoint the best dividend stocks in Australia is going to be an ongoing challenge for those that are just getting started. Without a point of reference, it can take a long time before individuals recognise what prospects look the part on paper and what opportunities should be leveraged. Yet there is one method that will deliver positive outcomes – holding conversations with industry specialists. Even a handful of appointments with a broker or market agent will be enough to outline key strategies and options that would have been overlooked, allowing them to establish frameworks that will work for months and years to follow.
3) Pay Attention to the Dividend Yield
Australian investors who want to make gains with these dividend stock options need to pay attention to one figure in particular – the dividend yield. This annual return is represented as a percentage of the stock price. For instance, if an organisation pays $1 in an annualised dividend, yet the stock price is listed at $20 per share, that will deliver a yield of 5%. A majority of figures will see yields between the 2-5% figure in this setting, so it is important to set expectations but also to keep options open when reviewing performance.
4) Assess Payout Ratio
A metric that should be examined when reviewing the best dividend stocks in Australia is to see what the payout ratio happens to be. Firstly there will be the dividend payout ratio that is calculated as a percentage of the company’s earnings. Then there is the cash dividend payout ratio, a figure that is sourced as a percentage of operating cash flow. Once these statistics are gleaned, it will be possible to run comparisons.
5) Take Note of Earnings Per-Share (EPS) Figure
What is the earnings per share (EPS) that is listed for the company? This is another statistic that deserves close attention when researching the best dividend stocks in Australia. Essentially this is a tool that breaks down the framework to outline what the value of an individual share is. It is another means of recognising what is viable when filtering the choice down to the basics.
6) Recognise Company Progress
These numbers and figures might be somewhat simple to examine when considering the best dividend stocks in Australia. Yet, they will be data that underlines important progress made behind the scenes with an enterprise. If the brand is making gains with product development, entering into new markets, keeping control of its debt, and fostering fresh partnerships and takeovers, that will be indicative of a company that is capable of delivering quality dividend returns.
7) Understand the Purpose of Dividend Investing
Is the desire to find the best dividend stocks in Australia an objective in saving? Is it a means of sourcing passive income? And Is it required to pay off a loan, buy a business, acquire property, or reinvest in other stock options across the market? In many cases, it is advantageous to have the blueprint in mind and recognize the target of the exercise before making firm decisions about moving money in this market.
