Companies paying the highest dividend yields

Investing in companies with the highest dividend yields can really boost your income if you pick your company stock properly. In this article we look at some of the strategies that you can use to create a portfolio of dividend companies so that you can develop a stream of passive residual income through your investments.

The key to creating a portfolio that holds it capital value while paying out good dividends is stock picking, if you can pick fundamentally strong stocks which have a strong history of increasing or steady dividends then you have a great recipe for success.

Which Company Pays the Highest Dividends?

When picking dividend stocks you need to pick companies that are fundamentally and technically strong. You need to analyse all your potential dividend stocks fundamentally which means checking their profits for the last 5 years, checking their revenue, their debt, how leveraged the company is and many more.

If you can develop a ranking system then this will really help you to get to know the stock. Once you’ve fundamentally analysed your stocks you can use technical indicators to get your entry right, using moving averages and indicators such as MACD and RSI will really help you to time your purchase well.

Analyzing Stocks That Pay High Dividends

Once you’ve analysed your stocks and are ready to buy at a certain price you could wait until the stock reached your desired price or you could start selling Puts with the strike price being the price you want to buy the share at.

If you’re considering buying INTEL (INTC) at $20 then you can start selling Puts at a strike price of $20, every time you sell a Put you receive a premium, so if the Put is priced at $2 you will receive $200 on expiry if the stock doesn’t go below $20. Using this strategy you can collect income while you wait for the stock to go to the desired level.

Top Dividend Stocks/Best Dividend Stocks

If the stock does reach $20 you will be assigned and have ownership of the shares, this is the big moment when you own a part of a company which pays a dividend. If you can eventually create a portfolio of ten dividends paying stocks that you really believe in then you’ll develop a great form of passive income that will last you a very long time.

You can rebalance your portfolio every six month to a year by fundamentally analyzing your stocks again to see if there’s been a drastic change, remember that this is a long term strategy for income and capital growth so you must have faith in your stock picking technique.

Highest Monthly Dividend Paying Stocks

If you’re concerned about the capital value falling then you could insure your portfolio against any losses, this would mean that you would have to settle for slightly less profits. Once you buy the dividend paying stocks you could buy a yearly Put Option where the strike price is the price you bought the share.

This would mean that if you market crashed you would still have your capital value returned to you. If you can do this for every dividend paying stocks you own in your portfolio you can rest easy at night knowing that there is no need to stress out whatever happens to the market.

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Companies Paying the Highest Dividends with Covered Calls

You could go a step further and start selling covered calls every month to recoup the cost of the Put Option insurance, if you’re Put option cost you $2 then you need to write covered calls that are greater than $0.20 cents to recover the costs. If You can sell covered calls for 12 months and recoup the cost of your Put insurance policy then you’re capital will not fall and only rise and you’ll be paid a monthly or quarterly income payment.

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Good Dividend Stocks/Dividend Stock List

You can take this strategy once step further by re investing all of your income back into the portfolio so it starts to compound, if you can also add your savings into the portfolio this would make it grow even quicker. You could compound and invest into the portfolio until you reach a desired level of income which you could use on a quarterly or monthly basis, the quickest way to compound would be to use monthly dividend paying stocks that pay a high dividend yield so that you would get your money and invest in the highest return stocks.

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Rebalancing Your Portfolio’s

I have created a list below which shows the top monthly and quarterly dividend paying stocks, you can use these lists to start fundamentally analyzing the stocks before you decide to invest.

The most ideal way to invest is to first buy the stock at a fair price using the Put Selling technique, you could then insure the stock once you buy it using a yearly put option as insurance, you could then sell monthly covered calls to pay for the insurance while you receive dividend payments without worrying about your capital falling.

Every six months you need to review all your companies again and then see if they are still worthy enough fundamentally to remain in your portfolio, for those dividend stocks where the company’s fundamentals have declined you need to decide whether there is a better company you could replace it with.

By continually monitoring the stocks real fundamental value you will always have a portfolio that pays dividend income and stock that will remain strong during the bull and bear markets. If you really are interested in learning more about dividend trading then read as many articles and books on the subject, paper trade until you can make a profit and then unleash yourself onto the market.