When I decided to switch from primarily investing in mutual funds to individual dividend stocks I wasn’t sure where to find ideas. I realized there had to be an easier way to crack the code so I could be a DIY investor. And with my limited budget, it didn’t make sense yet to buy into a dividend information subscription service.
My 4 favorite places to find dividend stock ideas
You can build your own watchlist of dividend stocks using the functions in Google Sheets to track various statistics, but the bigger question is what stocks to include on the list. Here are my four favorite places to start looking for stock ideas for my dividend portfolio.
Check the top holdings in Mutual Funds and EFTs
When I started investing directly in dividend stocks again in the first place I went to the portfolio held by my mutual funds. If those to stocks were good enough for the fund, they’re probably a good option for my portfolio.
Or at least an option to take a closer look at.
The fund managers are researching stocks to create a portfolio mix aligned with the fund’s goals. If you know the popular mutual funds (possibly ones that you already in your 401k for example), go to sites such as Morningstar or Fidelity to search on the fund’s symbol. Both of these sites list the top holdings for the fund.
Next, you’ll need to check which of the stocks also pay dividends and start checking to see if it’s the right purchase for the moment. If not, the stock can still sit on your watchlist for a potential future purchase.
Read the portfolio updates from the top posters on SeekingAlpha
Have you checked out SeekingAlpha? It’s a crowd-sourced website of articles and research covering a range of stocks, asset classes, ETFs and investment strategies.
There are many active investors who publish their portfolio updates either quarterly or monthly. Their stockholdings transparency gives you insight into potential stocks for your watchlist. A few of the investors also focus on building a dividend portfolio.
At the risk of saying this again, double-check the stock’s current dividends and health before buying anything simply because it’s in someone else’s portfolio
To start finding potential dividend investors on Seeking Alpha to follow, check out the site’s Dividend section. Looking at an author’s follower count and article comments will help identify investors with good advice.
Lists of companies with long dividend histories
Companies that pay dividends usually have a high probability of paying dividends in the future. You can’t 100% bet on past performance to guarantee future returns, but a company’s stock price will likely be punished if they lower to stop their dividend.
The S&P tracks a list of companies that have consistently increased their dividends for at least 25 years called the Dividend Aristocrats.
And there is also a list of companies tracked informally referred to as the Dividend Kings. These companies have paid and increased their dividends for at least 50 years.
Other lists are tracked by Dividend Investors called the Dividend Challengers which groups stocks into multiple categories depending on the length of their payment histories.
The products you buy
Finally, take a look at the products you buy regularly, especially when the market in a rough spot. The companies that make those products are a good place to check as well.
Peter Lynch, who previously ran the Magellan Fund, once suggested buying what you know. The more aggressive investors can think this is limiting, but as an idea for your watchlist, researching the products you know can help spark ideas.
And don’t forget to check out what other people are buying as well, especially the younger generations. You need to make sure the company will continue to be profitable in the future.
Wrapping up. Where else do you look for dividend stock ideas?
To start building your watchlist of dividend stocks to buy, there are many places you can get ideas from. I started with:
- the portfolio holdings in mutual fund and EFT,
- other dividend investors on SeekingAlpha,
- lists of stocks known for having long dividend payment histories, and
- popular products and stores
Once you build your initial research list, start looking closer at each company to decide if it’s a stock worth purchasing now or in the future. Also, remember to track the stocks’ Ex-Dividend Dates. I sometimes prioritize a stock purchase based on if I can catch the next dividend payment or if I just missed it.
Start calculating your dividends
Join our mailing list and receive our FREE Simple Dividend Calculator Spreadsheet helps you determine how much money you need to invest to reach your dividend income goal.
Pin for later
