How can I invest in dividend stocks on my own? What are the best dividend stocks to invest in? Let’s show you how to invest in dividend stocks, how to build wealth, and how to find dividend paying stocks. You dividend portfolio should include high dividend stocks with a high dividend yield, as these dividend stocks will produce the highest amount of passive income. To know how to invest in stocks and the best dividend stocks 2023 to invest in, check out the free stock screener below. Stock prices have fallen recently, causing yields across asset classes to rise. Dividend yields, bond yields, and treasury yields are all rising. To understand why yields are rising, you have to understand how bond yields and interest rates are related. If you want bond yields explained, and you want to know how rising bond yields affect stock prices, let me explain.
The recent market sell off has made some stocks really cheap and has presented some great buying opportunities, especially for dividend stocks. So how do you find these dividend stocks that are actually good, profitable companies that are paying large dividends? Well, with a free stock screener online, I just found 29 dividend stocks in companies that are large, that are profitable, that have more assets and more cash than they do liabilities, all with dividend yields of greater than 5%. And the best part about investing in dividend stocks is these provide passive income. Dividend stocks give you money in your account every single year, and you don’t have to do anything. All you have to do is hold the stocks and you generate passive income for free.
So let me show you how to find these dividend stocks. And once you find the dividend stocks that you want to invest in, let me show you how to actually go about investing in those dividend stocks. It all starts with a free online stock screener called Finviz, which you can find at finviz.com. Here’s the exact search that I used to find these dividend stocks: https://finviz.com/screener.ashx?v=161&f=cap_large,fa_debteq_u1,fa_div_high,fa_grossmargin_pos,fa_netmargin_pos,fa_opermargin_pos&ft=2&o=-dividendyield.
For now, let’s go through some of the filters that I used. First of all, on the descriptive tab, I selected the large cap stocks and those stocks with dividend yields of greater than 5%. Now the reason that I went with large cap stocks is because these are the companies that tend to be the most solid and these are the companies that tend to have the dividend yields that tend to last a long time. Sometimes you can find very large dividend yields in much smaller companies, but those smaller companies tend to not be very consistent with their dividends. So sometimes if you do get a smaller company, their dividends might not last, they might go away, they might get cut. So it’s better when investing in dividend stocks to filter out for the large cap or maybe mid-cap stocks and try to stay away from the smaller caps, which tend to be a lot less reliable.
Now in addition, we want to make sure the company has good fundamentals so that they can continue to pay out their dividend. So the other four filters that I used are on the fundamental tab include a debt to equity ratio under 1. That means the company would have more cash on hand than they have debt. I also have gross margin positive, operating margin positive, and net profit margin positive. And these filters all ensure that the company is profitable so that they can continue to pay out their dividends.
So that’s what you’re looking for. You’re looking for large companies that are profitable, that have more cash than debt, that will continue to pay a dividend as time goes on. Now, as the stock prices of these companies continue to go down, their dividend yields, that is the amount of interest that you get every single year for holding the stock, will continue to go up. And after applying these six filters, we end up with 29 companies with a dividend yield of larger than 5% that are very likely to continue to pay that dividend yield for many years to come. Now, if you want a direct link to this screener with the filters all set up for you already, use this link here: https://finviz.com/screener.ashx?v=161&f=cap_large,fa_debteq_u1,fa_div_high,fa_grossmargin_pos,fa_netmargin_pos,fa_opermargin_pos&ft=2&o=-dividendyield.
Now when it comes to actually investing in these companies, obviously you have to have a broker. Personally, I like to have a separate broker for my dividend portfolio. And the really nice thing about opening different brokers is you get a lot of free stocks every time you open a new broker. So some of the best brokers I like right now include Moomoo and Webull. Moomoo is offering up to 16 free stocks when you open an account using my link here and you deposit at least $100. You just have to keep your money in there for at least 60 days, which is no big deal. Webull is offering up to 12 free stocks when you use my link here to open an account and fund it with any amount. So make sure you open a separate account for your dividend portfolio, get those free stocks, and start buying the stocks in that separate portfolio with that huge head start with those free stocks when you use my link. And deposit at least $100 and leave it in there for at least 60 days.
Now, let’s talk about why these stocks continue to go down and whether you might want to wait before investing in dividend stocks to try to get them at an even lower price and hopefully a higher dividend yield, which will provide more passive income for you. Stock prices continue to fall because they’re dealing with a lot of headwinds right now which are pushing stock prices down. One is the fact that inflation continues to rise. Some soft commodity prices are surging, which is adding to consumer woes, as you can see here on this chart. Cattle, which is beef, sugar, orange juice, cocoa, they’re all increasing in price, which is driving inflation upward.
And as inflation continues to rise, this is putting more pressure on the Federal Reserve to raise interest rates. Unfortunately, rising interest rates are not good for companies as they slow growth and slow consumer spending. And now the ten year Treasury yield has risen to the highest level since 2007. I really hate to compare anything in this market to 2007 and the great financial crisis, but the reality is that’s just where we are at, which is why there’s a good chance that stock prices are going to continue to fall, making dividend stocks even cheaper and increasing yields and interest rates.
Now, as interest rates continue to rise, this is causing the US dollar to surge and that is a problem for stock market bulls. A rapidly strengthening dollar is often seen as a problem for big US multinational companies. A stronger dollar makes their goods more expensive to overseas buyers, and income earned overseas will be less valuable on their income statements. In other words, large multinational companies like Google, Amazon, Tesla, Apple, any company that does business around the world and is based here in the United States, is going to have a problem as the US dollar surges because this causes their income to go down, which in turn causes their profits to go down. And this was a major problem in 2022 last year, which is why we saw the stock market sell off so rapidly and so massively last year. It was one of the main reasons why we had a bear market last year was because the US dollar was rising and a lot of the large mega-cap companies were going down in price as their profits were going down. And this in turn caused the whole stock market to go down. And unfortunately, the dollar is rising once again.
Now the good news is that small caps are typically expected to outperform during periods of dollar strength, since most of their revenues come from within the United States. So small cap stocks, like many of the stocks that we have in the Millionaire Club portfolio, are expected to outperform the larger mega cap stocks over the next few months as the US dollar continues to rise. But be aware that a rising dollar also tightens financial conditions, adding to the other headwinds for stocks heading into the fourth quarter. In other words, the rising dollar is expected to continue through the end of the year, which is going to continue to put downward pressure on stocks through the end of this year.
Now, you may have noticed that these first couple of weeks of September, especially last week, resulted in a major sell off in the stock market, with stocks down about 4% on the week. And the reason for this is because of something that happens every single year here in the United States at the end of September that causes stocks to go down at the end of September every single year, and that is our US budget. The budget for the federal government starts on October 1st of every year and it runs through September 30th of every year. And if Congress, the House, is unable to come up with a new budget by September 30th, then the government shuts down. And without a budget, there is no spending and the entire government shuts down. Well, except for some of the most essential people, like some people in the military. But generally most of the government shuts down.
And this causes a major problem for the US economy because the US government is one of this country’s largest employers. And with so many people not getting paychecks, that significantly reduces spending, which severely hurts stocks. And we already see a major sell off in stocks in anticipation of a possible government shutdown, which could really hurt profits for Q3. And investors know this. That’s why they sell off stocks. And unfortunately, this year is no different. The government shutdown is coming up and so far we don’t have a solution. Across Washington, officials are bracing for government shutdown. Lawmakers and federal agencies are preparing for a lapse in government funding that is beginning to seem inevitable. Now, the House, that is Congress, will reconvene on Tuesday to continue budget negotiations after recessing last week. But failing to pass a spending bill by Saturday will affect non-essential government functions such as pay for federal government employees and Social Security benefits.
Now, normally this government spending gets fixed at the very last possible second, meaning it’s probably going to get fixed over the weekends. But we could still see a sell off in stocks through the end of Friday over fears of the possibility of a government shutdown, over fears of a budget not being agreed upon. And then Monday, if we still don’t have a budget agreed upon, then we will see a major market sell off due to the fact that the government is now shut down. But if they do in fact agree upon a budget over the weekend like they normally do, then on Monday, we could see the start of a pretty nice rally in stocks. But I would still expect the stock market to sell off through the end of this week over fears of that government shutdown.