The first and tutorial thing for investments is finding good stocks and avoiding bad ones. To explore a certain set of criteria, promising your profits to have a greater rate of return than the market's overall average, examine the vast territory of stock theories and find the one, suiting you best. There is no one universal strategy for any certain case; thus, do not you hope to find the only magic key among the variety of stock picking strategies. A universal and helpful thing may be your treating stock picking strategies as the art rather than the science.
There are so many factors, affecting a company's health, and it is quite a difficult task to foresee all the situations, influencing the steadies of businesses, as well as choosing the one from stock picking strategies for your certain case. You can easily know about the profits of the company, its qualitative factors, such as the company's staff, its competitive advantages and its reputation. Still, that information may turn out to be a subjective and intuitive process, hiding the full picture of the object you invest in. Moreover, the stock market may become a very dangerous place for an investor, when it comes to people's emotions. You may stay cold and business oriented in any situation, but can that be told about many stock players around you? You can never rely on the people's behavior, which can make the highest returns of your planning to become nothing in a matter of seconds.
Income investing is a type of investing, aiming to pick companies, which provide a steady income, and is also one of the most straightforward stock-picking strategies. To get a steady income you, should first think of fixed-income securities, such as bonds and stocks. Both of these investment figures provide a steady income by paying solid dividends.
What exactly makes bonds and stocks perfect instruments for getting profits and what companies are more reliable in this sense? If you focus on older and more established firms as an object of your investment, you will not loose. Such firms have reached a certain size, and even though they will not grow rapidly, it will still be able to pay out retained earnings as dividends as a way to provide a return to their shareholders. If you want to know which industries are the most prominent to invest, you will find them among utility companies, which have historically paid a fairly decent dividend and will continue to do so.
The above paragraph was dedicated to the safest returns of your investment, but why not to risk and drink champagne? The most important gauge to determine your choice is the dividend yield of the company you choose. The dividend yield is calculated by dividing the annual dividend per share by the share price. The average dividend yield for companies is two-three percent. If it is enough for you, it would be great, but the most are looking for a minimum five-six percent yield. To find such a yield, you should also examine a company's past dividend policy. The longer the company has been paying a good dividend, the more likely it will continue to do so in the future. Companies that have had steady dividends over the past five, ten, fifteen or even fifty years are likely to continue the trend.
You should understand the driving principle of stock picking strategies. When you find good companies with sustainable high dividend yields, you will receive a steady and predictable source of your revenue over the long term. Go forward and win.