Stock Investing Strategies

Stock investments

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Investing in Stable Dividend Stocks

One popular way of investing into the stock market is by simply buying dividend stocks. One strategy people use to invest into dividends is to buy already well establish companies that are paying out a dividend.

There are a lot of investors who will go out and buy MSFT just because it is a great dividend paying stock which will almost certaintly be around for many decades to come. Something like this could be a good idea if you have a ton of money lying around and simply want to put it into a stock an live off the dividends. However if you actually want it to grow there are better investments out there.

The major problem of investing into well established companies like these is just that, they are already well established. All the major profit that was to be made in them was made 30 years ago. Both Microsoft and Coke have been trading in the same trading range for many, many years. There are just better places to invest your money if you want it to grow.

Even with the dividends that they have paid out I doubt they have made any investor very happy lately. I doubt they have even help an investor to match the market let alone beat it. These companies may pay dividends, but unless you are investing millions of dollars into them, chances are it isn’t something you will be able to live off of.

So, what is a better way of investing for the long term? Well for long term investing the most powerful method is finding strong companies that are undervalued and likely to come up. This strategy is called value investing and looks at different fundamental factors such as the PE Ratio as well as the Debt to Capital Ratio to get some idea on how strong the company is.

This way you can tell how strong the company is and how fair the price of the stock is. Is the company trading at a discount or is it overpriced? This can be a very important thing to know.

Value investing lets you grow your money in the long term, while at the same time collecting on the ever growing dividends that they produce. Value investing may take more reasearch then simply buying already well established companies, but can be much more powerful as well.

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