Investing in the stock market in search of dividends: best stocks and strategies

Did you know that investing in the stock market in search of dividends is one of the most popular assets for modern investors and traders? It allows you to obtain a periodic return on your investment, if the dividend is obviously approved and paid by the company.

To invest in the stock market in search of dividends , it is therefore essential to learn to identify all the possible solutions that allow you to obtain coupons, i.e. additional returns, which can be added to those related to direct investment.

An activity that, given the presence of hundreds of stocks and products that allow for potential dividends, is very complex. We have therefore decided to simplify your analysis, offering everything you need to be able to start quickly and independently.

We will look at the best dividend stocks , as well as the best dividend ETFs , reviewing the best brokers (such as the regulated eToro) that allow you to start investing independently.

Investing in the stock market in search of dividends: what does it mean?

Investing in the stock market in search of dividends means going in search of financial instruments which, after having purchased them, allow you to obtain dividends. Dividends are nothing more than additional returns in favor of the investors and derived from the profits of the company.

When you buy a share, you become the owner of a series of rights, including voting rights, the right to benefit from any increase in the value of the individual asset, as well as rights to obtain any stock dividends (which may vary from company to company) .

Investing in the stock market in search of dividends allows you on the one hand to obtain potential returns from equity investment (or on ETFs if we are talking about ETFs with dividends) and on the other to benefit from added value, with the possible coupon.

Searching for dividend investment solutions means focusing on:

equity securities, which pay dividends to shareholders, i.e. to those who decide to buy and own the shares in the portfolio;
Dividend ETFs , i.e. managed funds that invest directly in companies that periodically pay dividends (and which we will have the opportunity to learn more about below).

Shares with high dividend and strong growth potential

Title	Ticker	Dividend Yield
Enel	ENEL	7.34%
Vivendi	LIVE	2.70%
Procter & Gamble	PG	2.51%
Coke	IS	2.78%
Exxon-Mobil	RAW	4.32%
Abbvie	ABBV	3.71%
McDonald’s	MCD	2.21%
Vodafone	VOD	6.02%
Johnson & Johnson	JNJ	2.54%
Lumen Technologies	LUMN	9.19%
Saudi Aramco	2222	3.37%
Horizon Technology Finance Corp	HRZN	10.20%
Intesa Sanpaolo	ISP	9.00%
Volkswagen	VOW	6.24%
Petrobras	PETR4	39.73%

The table above shows in a clear and detailed way the potential 15 million dividend shares , selected and extensively examined by experts in recent months. Large cap stocks, which stood out for dividend yields.

In this regard, however, we would like to clarify that historical returns are never a certain and mathematical guarantee of future returns as well. A company can always decide not to detach coupons, investing any profits in other activities.

Large tech groups often try to use profits to grow more and aim for even higher future revenues. If your interest is to go looking for dividend stocks, always opt for companies that post coupons on a constant basis..

Best dividend paying ETFs

In addition to stocks with higher dividends , we review a second financial product that is highly valued by investors, namely dividend ETFs . These are funds that invest in baskets of companies that usually pay periodic dividends.

When dividends obtained through owning a direct stake in an exchange traded fund are paid, there are usually two options: withdraw the dividends, or rely on systems that reinvest the income in the same fund.

Below is a list of the best dividend ETFs of 2022:

iShares Core High Dividend ETF, with an annual dividend of 3.46%;
iShares Select Dividend ETF, with an annual dividend of 3.73%;
SPDR S&P Global Dividend ETF, with an annual dividend of 3.22%;
Vanguard Dividend Appreciation ETF, with an annual dividend of 3.01%;
SPDR S&P Dividend ETF, with an annual dividend of 3.24%;
Wisdom Tree US High Dividend Fund, with an annual dividend of 2.92%;
Vanguard Total Stock Market ETF, with an annual dividend of 2.80%;
Vanguard High Dividend Yield ETF (VYM), with an annual dividend of 2.95%;
Wisdom Tree US Dividend ex-Financials, with an annual dividend of 2.73%;
Global X SuperDividend UCITS ETF, which has been on the market for a few months.

How to invest in the stock market in search of dividends

How and where to invest in the stock market in search of dividends

If you want to invest in the stock market in search of dividends , you can rely on one of the best online trading brokers. They allow you to access the section of shares and to proceed with their direct purchase, in an autonomous and simplified way.

However, remember that not all platforms offer the possibility to buy the real stock (many only allow you to trade with derivative instruments). It also opts only on brokers with real licenses, i.e. fully authorized by European entities.

Once the share that pays dividends has been selected, it will be sufficient to proceed with the purchase and wait for the possible payment of the coupons on the established date. You can always check the status of your wallet and any credit directly to your account.

Two of the best trading brokers that allow you to buy real shares (thus benefiting from hypothetical stock dividends), are:

eToro;
XTB.

Investing in dividend stocks with eToro

The first successful broker, which serves as both a platform for trading contracts for difference and a platform for the real purchase of shares , is eToro (click here for his review) . It is a regulated operator and with the appropriate licenses.

With a quick registration, which takes just a few minutes, you can access the securities section and identify the dividend shares of your interest. If you proceed with the real purchase strategy, you can therefore benefit from the payment of coupons on a periodic basis.

The broker sets itself apart from the competition as it offers zero commissions on the purchase of real shares , as well as the ability to start with a very low minimum deposit, from just 50 euros. Below are the steps to invest in the stock market by hunting for dividends with eToro:

open an account;
verify identity;
upload the initial deposit;
look for the stock with dividend;
buy the asset and wait for the payment of any dividend.

67% of eToro CFD users lose money

Invest in dividend stocks with XTB

A second complete broker, also in this case very valid for the purchase of dozens of real shares, with high capitalization and which also detach dividends, is XTB (click here for his review) .

The broker has very low spreads on assets and always allows you to start with a convenient demo account (also manageable via mobile application). You can access the stocks section, study the charts in real time and choose the stocks with the highest dividend.

Here are the steps required to invest in the stock market in search of dividends with XTB:

register on the official page;
verify identity;
charge an initial deposit (even from 100 euros);
identify the dividend stock;
buy the shares and wait for any periodic dividend.

Your capital is at risk

Investing in the stock market in search of dividends: pros and cons

Following, two opposing sections that expose the main strengths and the main weaknesses on investing in the stock market in search of dividends.

Advantages on investing in dividend assets

there is the possibility of obtaining an additional income on the investment;
it is always possible to choose only the companies related to one's sector of interest;
you can choose whether to bet on single dividends (of shares), or linked to investments on ETFs;
potential returns can always be reinvested in other assets;
they are an excellent diversification tool.

Risks on investments in dividend assets

the risk of non-dividend paid by the company must be considered;
the dividend yield could decline over the years;
the dividend could be approved below expert estimates.

Is it possible to live on dividends?

At this point, you may be wondering if it is possible to live on dividends and how much to invest to be able to live on income for the rest of your life. Certainly a legitimate question, but one that cannot find a precise answer, given the different needs of each individual investor.

In any case, it is still possible to try to make estimates on this possibility, considering all the existing factors. Let's suppose that your interest is to obtain (taking into account the unpredictability of the different percentages) a return of 50,000 euros per year.

Considering that the dividend yield percentages can vary from a minimum of 1% (or less) to a maximum of 6% (in very rare cases even higher), let's try to calculate how much capital is necessary to invest to obtain the target of 50,000 euros.

In the most optimistic hypothesis, with a dividend yield of 6%, to obtain 50,000 euros per year, the creation of a portfolio of approximately 833,300 euros is required. Any additional costs and expenses must obviously be subtracted from this.

Certainly a very high capital , which leads us to underline how investing in the stock market in search of dividends is certainly a concrete possibility to be able to diversify your portfolio and a little less realistic to live on an income (with medium-low investments).

Investing in the stock market in search of dividends: books

By carrying out quick online searches, it is possible to come across many texts, also written by professionals in the sector, on the concept of investments linked to stock dividends , or on other related products.

Below is a list with 4 books on investments associated with dividends:

Living on an annuity with dividends. How to create a real passive income forever and proof of the collapse of the markets (by Andrea Marnati);
Dividend Investors: Earn passive income with monthly dividend stocks (by Ludovic Marin);
Dividend income: complete guide to investing to obtain dividends (by Federico Sanna);
Investing in Dividends: A Guide to Investing in the Stock Market and Achieving Financial Freedom (by Antonio Robinhood).

Investing in the stock market in search of dividends: blog and news

Investing in the stock market in search of dividends also means staying constantly updated on the official presentations of the boards of directors (which have the task of approving the dividends), as well as on the latest stock market news.

The dividend segment can change from period to period and show significant changes, which is good to anticipate. Therefore, remember to always pay maximum attention and take advantage of all the tools that the web and that the best brokers make available, so to consider:

online forums , to find information (however, always evaluate the source of information);
professional websites on the world of finance (we of Digital Finance also constantly offer complete and exhaustive updates on the latest quarterly reports and on any dividend approvals);
up-to-date data that is shown directly on specific stock pages within online brokers (for example, the historical dividend yield is shown on eToro, as well as many other information on the company and the stock in question, including its performance in real time ).

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SEPUTAR TEKNOLOGI