by nissa_amas_katoj

Created on: October 22, 2008

When you start investing in the stock market, it may be hard to figure out which stocks to invest in. Some of us roam around the internet looking for a hot stock tip, but when we find one, we wonder, how much does that guy know about stocks, or anything else for that matter? It's better to learn a little about the market so you can research and buy stocks intelligently.

One good strategy is to invest in dividend paying stocks. A good dividend paying stock will make you money in two ways. First, it will increase in value- the stock price will go up. Second, it will pay dividends, usually quarterly. Because of the dividends, you don't need to sell the stock to make money from it.

In addition, dividend paying stocks are said to perform better than their non-dividend competitors. Perhaps the fact of the dividend itself shows that the company is well managed enough to afford it. In my own portfolio, the three stocks I own that are on a list of highly recommended dividend stocks have kept their value even in the current bear market.

Where do you find out about dividend stocks? I use www.dividend.com, a web site which provides research and information into dividend stocks. It rates all the dividend stocks available based on a number of factors, and also supplies a list of the best dividend stocks, which is updated every day after the market closes.

There are a number of things you want to learn about a potential dividend stock investment. First, how solid is the company? Does it have good management? Does it have too much debt? Is it in a steady growth pattern?

Then you want to know about the dividend history of the company. How regularly does it pay the dividends? Are the dividends reasonably high? Most importantly, are the dividend amounts growing? A company that can afford to pay increasing dividends to its shareholders is likely to be a company that is currently doing well, and will continue to do well into the future.

Once you have purchased your choice of dividend stocks, be sure and sign up for the dividend reinvestment plan. This takes your dividends, when paid, and reinvests them in the same stock without any trade fees. This means that the amount of the stock you own grows steadily.

Dividend stocks help you grow your money in two ways, are more stable in bear markets as well as bull markets, and may be the best way for you to invest your retirement funds. It's something to seriously consider.

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