Five Rules For Conservative Dividend Investing

Number 1. Sustainable profits is the best indicator of a great investment. If a company has been profitable for the past thirty years, with no more than one or two unprofitable years, you have likely identified a stock that is a conservative dividend investment.

Number 2. Don’t worry if your stock does not go up right after you buy it. When the company pays out a dividend, it can be reinvested at a lower price and then you will look back on it years later and be glad that the price was lower because it meant that you acquired more shares than would have otherwise been the case if the stock price rose quickly.

Number 3. Pay attention to companies that are selling more goods or services while simultaneously raising prices. With very few exceptions, this characteristic is present for multi-generational compounder investments. 

Number 4. Fear and greed are the worst emotions to maintain in relation to the purchase and sale of investments. Rarely pay more than 20x earnings for an investment and I would argue that you should never sell a stock on bad news if it is still earning over $1 billion in annual net profit during the period of bad news.
Number 5. Remember that volatility is the price of admission for increasing your purchasing power. Savings accounts and bonds will appear nice and stable, but inflation will ensure that purchasing power does not increase. The only way to really get ahead regarding increases in purchasing power involves the ownership of businesses for a long enough time to receive the fruits of those businesses.

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