When I first started investing, I was never really was interested in dividend stocks. I wanted appreciation. I wanted to find the next Google (GOOG), Apple (APPL), Microsoft (MSFT), that next stock that will leap 1000% in appreciation retuns. The further I have gone into stock investing the more I understood that its rare to find these good stocks. I also know for retirement accounts which do not get hit with capital gain taxes when you sell that they are perfect for dividend stocks.
If I have a choice to a brokerage account or retirement account, you always want to invest the dividend stocks into the retirement account. You get the interest without any of the taxes involved. If I had bought the dividend stock in my normal after-tax brokerage account, I would have to pay taxes on the interest. Therefore, I rather load up my retirement accounts with dividend stocks that will pay for the long-term. This means I am looking for dividend stocks that have continued to raise their dividend year-after-year and they have a long-term track record of stock rising. It doesn’t matter that it appreciates only a little at a time because I am getting the nice dividends.
In the past year, I have advocated oil stocks like Chevron (CVX). It pays a nice dividend but it also has appreciated rapidly since my recommendations. The price makes it more tough to recommend such a stock since that means the dividend percentage is lower when you purchase at the price currently at $113 which gives it a 3.87% dividend. This isn’t bad but I also think the price is a little high.
I rather look at stocks that are weak now and undervalued. With the Fed planning to meet in the middle of December, there is a high chance that they will raise interest rates. This means strong dividend stocks will most likely get sold off. I am setting my radar on Omega Healthcare Investors (OHI) which pays over 8% dividend. I am also looking at New Senior Investment Group (SNR) which pays over 10% dividend. I have discussed them in the past article and I think they will be nice long-term holds that will continue to pay the dividend and hopefully raise it long term.
