Most stocks do not pay dividends, because they pile all of their money
back into the company in order to create more earnings. But larger and
more established companies often pay dividends. Some sectors such a
real estate investment trusts and utilities pay out high dividends.
You can calculate the dividend yield of a stock by dividing the most
recent full year dividend by the current stock price. So for instance
if a company paid out $1.00 worth of dividends in the past year and is
trading at $20 a share it has a dividend yield of 5%.
It is well worth having some dividend stocks in your portfolio,
because the dividends compound over time, but you cannot just invest
solely for dividends when it comes to the stock market. In the end
everything you have been told you about when picking stocks is more
important than buying a stock just because it has a high dividend. In
fact, you usually only see huge dividend yields when a stock has
declined in price due to perceptions that earnings are going to
decline or the company is in trouble. The company will then probably
have to cut or even eliminate its dividend.
You have thus far been provided tips on how to identify the stocks
that are most likely to double in value. The stock market tends to
reward the most the stocks of companies with high growth rates
relative to their valuation. But in the end it is not market
fundamentals that move stocks, but investor psychology and the stock
market itself.
You have also been shown how to identify the sectors in the market
that are likely to outperform the rest of the stock market over the
next twelve months. Ideally you want to focus your buying to stocks in
these sectors. Also, be sure to keep in mind the specific chart
patterns that occur before a stock often doubles in value and how the
powerful players take their positions at this time. Additionally,
remember the key valuation metrics you should use to make sure you are
buying quality companies.
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