Every investor aiming to receive dividends in the long term is constantly wondering what stocks to buy for the next investment. There is no single and simple method to choose a good dividend company, but there are a number of recommendations and tips that can help you with this.

Content of article

What to look for when choosing a company

How to choose a company with high dividends

How many shares do I need to buy to get good dividends

When can I start receiving dividends

Russian companies with the best dividends

American companies with the best dividends

What to look for when choosing a company

First of all, it is necessary to assess the dividend yield. It is calculated as the ratio of dividends to the current share price. This figure is indicated as a percentage. If the amount of future dividends is unknown, it is assumed that it will remain at the same level. But this approach is not reliable, as the company can significantly reduce the amount of dividends or even stop paying them at all. Therefore, before you buy a share for a long term, it is not superfluous to get acquainted with the financial statements of the company and the dividend history.

Secondly, it is necessary to calculate the dividend payout ratio. A company with a consistently high income is more likely to pay stable and most likely growing dividends. This indicator will allow you to understand whether the dividends are sustainable. This indicator is calculated as the ratio of dividends per 1 share to profit per 1 share. If the ratio is more than 100%, the company pays more than it earns. This situation will not last forever, in the future dividends will be reduced. Therefore, investing in such shares for a long period of time is not a reasonable solution, since there is a risk that the company will not only reduce the amount of dividends, but will stop paying them at all.

Third, the company's debt should be assessed. The investor needs to beware of companies with excessive debt. In order to understand the size of the company's debt, look at the ratio of the company's liabilities to equity. If the debt is much higher than the company's own funds, beware of such a purchase. The ideal ratio is below 1. If the company has a debt, it will spend additional funds to repay debts, and not to increase dividend payments.

Fourthly, it is necessary to assess the state of the industry. During a downturn in a particular industry, companies belonging to that industry either suffer losses or show less profit than usual. While the industry is in growth, the chance to increase dividends is higher.

How to choose a company with high dividends

To do this, you need to know the size of the upcoming dividend and the current price of the company's shares. The higher the price of 1 share, the lower the dividend yield.

Important! You should not compare the absolute values of dividends of different companies. Dividend yield should be calculated for each company (according to the formula described above).

How many shares do I need to buy to get good dividends

Dividends don't make you rich overnight. Only fraudsters promise super high profitability, because the real business of companies can not constantly grow at a frantic pace and spend all the profits on dividends.

Since the stock market rotates a lot of money, over time, dividend yield is leveled – if the company increases dividends, its shares are in great demand, this leads to an increase in the price of them, which, in turn, reduces the dividend yield (as you remember, dividend yield is calculated as the ratio of the amount of dividends per 1 share to the price of 1 share).

For Russian stocks, a good yield is considered to be 7% or higher, for American companies – 3% or higher. Depending on your desires, you can purchase either riskier assets with higher returns or less risky assets with lower returns. In any case, be extremely careful, the risk should always be justified. Don't invest all your money in high-risk assets.

When can I start receiving dividends

You will receive dividends if you are in the register of shareholders at the time of closing of this register. After the register is closed, it takes from a few weeks to a month, after which the company begins to pay dividends. Dividends are paid either to your brokerage account or to a Bank account (this depends on the terms of your cooperation with the broker).

Russian companies with the best dividends

Data on upcoming dividends are constantly updated. As of the current date (28 may 2019), the list of Russian companies with the best dividends is as follows:

American companies with the best dividends

In this case, information about upcoming dividends is also constantly updated. It is also worth noting that American companies pay dividends quarterly. Therefore, you will be able to achieve this yield only if you support the share for the whole year. The most profitable in terms of dividends American companies on the current date (may 28, 2019) are as follows:

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