How To Series: How to build a dividend portfolio and receive a side income?

If you’re looking to build an additional stream of income and invest in stocks that pay regular and recurring dividends, you might need some help narrowing your options down. Thankfully, there are great dividend-focused resources out there that’ll help get you started on your investment strategy! Here are five of our favourite ways to find good dividend-paying stocks.

1) Search Through Dividend Ranking Lists

There are three lists that feature dividend-paying companies that could be worth looking into. Each of them have a track record of increasing year-on-year dividend payouts even during times of economic downturn.

The first are the Dividend Kings, the best-in-class dividend growth stocks. This list contains companies which have paid and increased dividends for at least 50 years in a row. Essentially, the longer you hold these stocks, the greater your chances of accumulating wealth.

At a lower but still-elite level, are the Dividend Aristocrats. They represent members of the S&P 500 stock index that have paid and increased its base dividend every year for at least 25 consecutive years.

Lastly, we have the Dividend Achievers. They are stocks that have raised their dividends for at least 10 consecutive years. This list is particularly useful if you’re looking to find companies that could offer faster dividend growth.

2) Use Dividend Stock Screeners

You could also use a dividend stock screener to find out which stocks pay the highest-paying dividends using a particular stock-picking criteria, such as industry. Though there are many options out there, Yahoo! Finance has a stock screener that we like to use to get ideas for dividend stock investing. Morningstar is another great option as well.

3) Look in Dividend-Rich Industries

Not all industries pay dividends equally, and some are known for more stable and promising dividend payouts than others. The common thread between these stocks is that they generally come from sectors that provide essential goods and services. Here are some industries to pay closer attention to:

Utility Sector

Our global economy runs on oil, electricity, and gas, so it’s only natural that major companies in these sectors are  part of the cornerstone of any bluechip dividend stock portfolio.

FMCG Sector

In a similar vein, the consumer staples sector yields stable, ongoing demand. Food and household products are a year-round need for all individuals, even through trying times like a pandemic or inflationary periods. Stable revenues typically provide FMCG companies with the cash flow needed to pay out regular dividend payments to their investors.

Electronic and Telecommunications Sector

In this digital age, we’ve grown increasingly dependent on our smartphones and other technologies in our everyday lives. It’s why you no longer need to phone a broker to place a trade, and can invest directly from your smartphone using the wealth of investment apps out there. Companies like IBM and Microsoft have been known to pay pretty decent dividend yields for long-term investors.

4) Check out Speciality Dividend Investing Websites

There are a few financial websites which are focused on dividend investing, and they can be incredibly useful as well. Here are two resources to check out.

Dividend.com

Dividend.com uses a Dividend Advantage Rating System, which rates and analyzes over 1,600 stocks using 5 criteria:

• Overall Yield Attractiveness
• Relative Strength
• Dividend Reliability
• Dividend Uptrend
• Earnings Growth

You can also browse their comprehensive guide on dividend investing, which covers dividends by sector, yield, and other criteria. There, you’ll also be able to get some inspiration for your own portfolio by scanning through the model dividend portfolios available for free. They also offer a premium service that provides exclusive stock recommendations and tools to paying subscribers.

Dividend Investor

Dividend Investor’s mission is to provide the most accurate and insightful dividend information available on the internet that is free from bias or personal interest. The platform offers fairly detailed dividend data, which you can search for using the ticker symbol, and other free-to-use tools like the dividend growth calculator.

They are also a good source of dividend-related news, providing information of firms that are going ex-dividend in the near future or new companies paying monthly dividends to look out for.

Their premium content is also rolled out five times a day, which is more than enough for the average user. Other premium features include access to the 20-year rolling history of dividend data, an ex-dividend calendar, and more.

5) Search through Stock Exchange Sites

The stock exchanges themselves also provide tons of valuable and current dividend data on the companies listed.

The NASDAQ offers a history tool, a dividend calendar, and screeners for the stocks with the highest yields. On the other hand, the New York Stock Exchange (NYSE) offers a historical database that may be used to look for ex-dividend dates for a particular time period.

The next time you’re considering investing in first-rate dividend-paying stocks, try hitting up a few of these websites! As usual, make sure you conduct a thorough research on each prospective stock’s financial health across several indicators, as relying on dividend payments alone to make your investment decisions isn’t advisable. This will help you improve your odds of getting a favorable return on investment in the long run.