Companies that regularly pay dividends tend to be stable firms with strong balance sheets and stock worth owning -- especially if they consistently sustain or increase the payouts. Be aware, though, that companies cut back or suspend stock dividends altogether if faced with real trouble, such as a major financial crisis. You could start by choosing low-cost, no-load mutual funds or exchange-traded funds that focus on the stocks of dividend-paying companies. The SPDR S&P Dividend ETF draws from S&P 1500 companies that have increased their dividend payouts for at least 20 years in a row. Both the Vanguard Dividend Appreciation ETF and the Schwab U.S. Dividend Equity ETF include the stocks of companies that have paid dividends for at least ten consecutive years; they charge slightly lower annual fees than the SPDR (0.10 percent or less, compared with 0.35 percent).
If you prefer not to open an account with a broker, you'll have to invest in a mutual fund rather than an ETF. Try the Vanguard Dividend Appreciation Index Fund, which charges a low 0.20 percent annual fee.
A well-diversified investment portfolio also includes international stocks and bonds, as well as some cash. I encourage you to learn about asset allocation and consider your options beyond U.S. companies. You can find free information on the websites of the brokers Fidelity, T. Rowe Price and Vanguard. If you decide to see a financial planner, avoid any potential conflicts of interest by selecting an adviser who charges a flat fee rather than a commission.
Suze Orman is a award winning certified financial planner and author of several books including 'The Road to Wealth'. She went from being a waitress at age 30, making $400 a month, to now having her own TV show and a net worth of $30 million dollars.
