3 Steps I’d Take to Find Top Dividend Shares to Buy in March and Beyond

Searching for dividend shares with solid track records of shareholder payouts, defensive appeal and sound growth strategies could be a shrewd move.

Young adult woman walking up the stairs with sun sport background

Image source: Getty Images

Even though the stock market has rallied since the 2020 market crash, the economic outlook remains very uncertain. Therefore, it could be prudent to seek dividend shares that offer defensive characteristics and a solid track record of paying shareholders a rising passive income.

Furthermore, buying dividend stocks that have improving outlooks could be a sound move. Successful growth strategies implemented by a business can make a very positive impact on the level of shareholder payouts over the long run.

Dividend shares with defensive characteristics

Dividend shares could offer an appealing means of generating a passive income in today’s low interest rate environment. However, they can be significantly riskier than other income-producing assets – especially with the challenging outlook that remains in place for the world economy.

As such, buying dividend stocks that have defensive characteristics could be a sound move. It may mean that an investor’s holdings have a greater chance of offering a rising passive income irrespective of economic conditions. This could mean searching for dividend stocks in sectors such as utilities and tobacco, where sales and profitability may be less impacted by the prospects for the economy than other industries.

A track record of dividend growth

Dividend shares that have strong track records of growing shareholder payouts could be relatively appealing. For example, they may have been able to grow, or at least maintain, their shareholder payouts in previous periods of economic turmoil. This could indicate that they have the capacity to adapt their strategies to evolving operating conditions.

The track records of dividend stocks can be easily accessed through searching their annual reports. They show detailed information of their previous payouts, as well as their reasoning behind specific strategy shifts. They could also provide guidance as to how a company has been able to evolve to meet changing consumer tastes, and how it plans to do so in future after what has been a very disruptive period for many industries.

An improving financial outlook

When searching for the most appealing dividend shares to buy today, it could be a good idea to check their growth strategies. This could provide an indication of the likelihood of them being able to increase profitability so they can afford a rising dividend in the coming years.

Clearly, assessing any company’s financial outlook or strategy is very subjective. Even if its prospects seem to be bright, there is never any guarantee that they will produce rising profitability or a growing dividend.

However, through buying such companies, an investor may be able to increase their chances of holding successful businesses that make attractive dividend shares. A wide range of such companies in a diverse portfolio could lead to attractive income returns that grow at a relatively fast pace in the long run.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

More on Dividend Stocks

Dividend Stocks

Here’s the Next Dividend Stock I’m Going to Buy

As the fear of recession increases, panic increases. At times like these, a dividend stock can mitigate your portfolio's downside.

Read more »

worry concern
Dividend Stocks

Housing Market in May 2022: Buyers and Sellers Are in a Bind

Many homebuyers are re-evaluating their options due to rising inflation and mortgage rates, but sellers hope they would change their…

Read more »

Money growing in soil , Business success concept.
Dividend Stocks

3 Low-Yield Stocks to Buy for Decent Growth Potential

A low yield doesn't always mean that the company is a miser with its payouts. Sometimes, it's the result of…

Read more »

edit Safety First illustration
Dividend Stocks

3 of the Safest High-Yield Dividend Stocks in Canada

Not all high-yield stocks are inherently dangerous, but it’s still a good idea to play it safe and choose companies…

Read more »

A stock price graph showing growth over time
Dividend Stocks

RRSP Investors: 2 Oversold TSX Stocks to Buy for Dividend Growth

The market pullback is giving RRSP investors a chance to buy some top TSX dividend stocks at cheap prices.

Read more »

stock research, analyze data
Dividend Stocks

Buy the Dip: 2 Top TSX Dividend Stocks on Sale

These top TSX dividend stocks look cheap to buy today for a portfolio focused on passive income.

Read more »

grow money, wealth build
Dividend Stocks

2 Top TSX Growth Stocks That Also Pay Investors Tasty Dividends

Growth stocks on the TSX such as goeasy and Brookfield Renewable also provide investors with tasty dividend yields.

Read more »

money cash dividends
Dividend Stocks

Dividend Stocks: The #1 Way to Earn Passive Income

Earning passive income from dividend stocks could be enjoyable. Here are a few tips to simplify your process.

Read more »