Last Saturday, in our Get In The Black Facebook group, we discussed how to cover your monthly expenses by investing in income-producing assets.

During the session, I asked this question, “how much investment income did you earn last year?”

Do you know the answer?

Was it enough to cover your monthly expenses?

If not, keep reading to learn how you can incorporate dividend-paying stocks into your portfolio to get you closer to covering your monthly expenses with investment income.

One of the ways you can close the gap between your monthly expenses and your investment income is by investing in dividend-paying stocks.

What if there was a way to receive regular income from your investments? Here at ITB, one of the tenets we live by is generating income through cash flow investments.

There are several ways to do this. One way is by investing in dividend-paying stocks.

What is a Dividend?

A dividend is a portion of the profits a company makes that given to shareholders. If you are an investor in a publicly-traded company, the company has the option of paying out dividends to investors.

Why Should I Invest in Dividend Paying Stocks?

Dividend-paying stocks are great for receiving regular income. When you invest in a stock and pays a dividend, if you own the stock two days before the record date, you are entitled to the dividend payment.

How Do I Find Dividend Paying Stocks?

There are a number of resources you can use to find dividend-paying stocks, but first, you should know that some sectors are known for paying dividends.

For example, utilities and telecommunications companies are known to pay dividends.

If you’re looking for a list of dividend-paying stocks, you can check out Nasdaq’s Dividend Calendar . You’ll be able to conduct a historical analysis of past dividends and upcoming dividend-paying stocks company.

But how do you choose among the thousands of dividend-paying stocks?

Enter the Grand Dame of Dividend investing, Geraldine Weiss.


Who is Geraldine Weiss?             

Geraldine Weiss is a well-known investor and is the first woman to be a licensed investment counselor. Known as the Grand Dame of Dividend Investing, Geraldine has been considered one of the most successful value investors of all time.

She gained fame by publishing the Investment Quality Trends newsletter and her emphasis on investing in value companies based on their dividend history and potential instead of their earnings.

Geraldine believed that dividends are the key to finding value investments.

What is the Grand Dame’s Dividend-Paying Stock Criteria?

Criteria #1: Dividends and Earnings Increases

The company should have a dividend increase in 5 of the last 12 years and increase earnings 7 of the last 12 years.

Weiss recommends 12 years because it’s enough time for a company to experience the ups of downs of the business and economic cycles.

Criteria #2: Well-Ranked Company

Standard & Poor’s Global is known for providing insightful research. One of their divisions, S&P Market Intelligence, produces Earnings and Dividend Rankings, which rank stock companies.

The company assigns a rating to a company based on a consistent record of earnings and dividends growth. Companies with an A- rating or above are considered “above average” and a more stable company.

The Weiss criteria say that a well-ranked company is a quality stock for investment.

Criteria #3: 5+ million Shares Outstanding

The company should have at least 5 million shares outstanding. Geraldine believes this ensures enough liquidity and strong demand for its shares when shareholders are ready to sell.

Outstanding shares are shares that are currently owned and held by shareholders. If a company has many outstanding shares, there’s a good likelihood that the company can meet its liquidity needs.

Criteria #4: Shares Held by 80+ Institutional Investors

Institutional investors are the hedge funds, pension plans, banks, credit unions, insurance companies, etc. A stock held by one institutional investor is likely to be held by other institutional investors due to groupthink.

Another reason for this requirement is that often certain institutional investors are not permitted to take risks with the funds they manage, so they seek stable and quality stocks for investing.

Criteria #5: The 25-year Streak

Last but not least is the 25-year streak criteria. The criteria set a high bar, but if you’re able to find companies that meet it, then you’re on to something.

The criterion is that a company should have a 25-year track record of uninterrupted dividend payments.

At its core, the reasoning behind this requirement is that if a company can survive the ups and downs of multiple downturns in the economy and still manage to pay dividends, it may be a worthwhile investment.

Finding Companies That Meet the Dividend Criteria

Once you understand the criteria, the next step is finding companies that meet the requirements. You can use stock screeners to narrow your selection.

According to Geraldine’s analysis, if a company meets the criteria above, it’s worth a buy consideration.

What happens if a company meets some but not all of the criteria above?


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