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Common New Dividend Investor Mistake (Don't Be Fooled)

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Feb 12, 2019

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Common New Dividend Investor Mistake (Don't Be Fooled)
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Common New Dividend Investor Mistake (Don't Be Fooled)

A common new dividend investor and investing mistake I see most often is an investor buying dividend stocks based on high dividend yield stated as a percentage.

Many times a high dividend yield can be a signal of fundamental problems within the company. If a share price of a stock drops significantly, this causes the stated dividend yield as a percentage to increase which can cause "shiny object syndrome".

Even if the share price has remained relatively flat, the company might be implementing leveraging techniques to pay a higher-than-average dividend yield. This is most commonly seen with high yield dividend exchange traded funds or "ETFs". These funds pay a large yield during good times in the market but become the financial equivalent to carrying Polio when a market correction presents itself.

In this video I illustrate the difference between a good and bad dividend stock along with a few other helpful tips for new dividend investors seeking passive income.

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Disclaimer: I'm not your financial advisor, attorney, or tax professional, and nothing I say is meant to be a recommendation to buy or sell any financial instrument. This video is intended for entertainment purposes only. Do your own due diligence, and take 100% responsibility for your financial decisions. Seek professional advice and guidance to aid your financial decisions.