We all like the idea of income stocks because we all like the idea of getting passive income. But that does not mean you should just go out and find the stock with the highest dividends on the planet and buy it.
There are many ways to enjoy getting an income from stocks.
They are.
1. Dividends
Of course if a stock offers dividends that is a real plus. This is the most passive way to make money in the stock market, after all who doesn't want to collect monthly checks just because you own a stock.
If you are looking for great dividend plays it is important to find out how much a stock has paid out in the past. This isn't always an accurate predictor of the future but it could give you a clue of what to expect.
2. Appreciation
Dividends aren't the only way to make money from a stock. In fact it is probably the least profitable way of making money in the stock market.
Looking for stocks that will grow fast gives you the greatest potential.Stocks with good fundamentals and are in an uptrend tend outperform other stocks. So looking at how the stock could perform is a good idea. Remember if the stock goes under a 10% annual dividend isn't going to help you very much.
3. Covered Calls
Covered calls offer you a great way to pull money out of a stock. If you own a stock you can sell someone else the right to buy the stock at a certain price on or before a given date. This means that if you keep selling covered calls you will eventually be called out and have to sell your stock.
This isn't always a bad thing, especially when you are selling your stock for a profit.
Income Stocks