This today’s post, I want to share with you why when you’re building your Dividend Portfolio, it’s so important to consider this one metric, instead of focusing too much on the current dividend yield.
Often I see investors put too much emphasis on the dividend yield when they are deciding on which stocks to include in their portfolio, and whether to buy or sell a stock in their portfolio.
Dividend yield fluctuates according to the current market price. If the stock price goes up, while the dividends remain the same, the dividend yield can be down. But that doesn’t mean the stock is not worthy to be in your dividend portfolio.
On the other hand, a currently high dividend yield may not necessarily be a good dividend stock. Because the yield can be high simply because the current stock price has fallen significantly.
While we do look at dividend yield as one of the metrics in analyzing whether it is a company we want to add to our portfolio, we don’t only focus on this.
The main objective of building a dividend portfolio is that we can create enough income cash flow from dividends themselves, that we’ll never have to touch your initial capital or principal.
