08 March 2006

4 Steps to Premium Dividends

I love the advice of the Motley Fool. They are usually spot on when talking up value stocks (though they thankfully abandoned growth stocks after the tech bubble). However, they sometimes forget they are talking to a lay audience.

The advice that they give is impeccable. However, not everyone has the ability, or time, to not only become an expert in one industry but to read through SEC filings. Abandoning Yahoo! Finance or other screeners just isn't an option for most people. So, what do they suggest? Buy their newsletter! (of course)

Instead, they should be telling you to rely on time-tested ideas like finding stocks with lower P/E ratios than return on capital ratio. Stick to companies you've heard of. Do a Google News search for any bad news out there. Look at news stories on Yahoo! or MSN Money to see if anything has come out that would knock the stock down.

Or, conversely, you could invest in mutual funds or ETFs that invest primarily in dividend stocks and let professionals do the work for you. That's my suggestion and that is what I do.

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