As I mention on my contact page, I believe that you need to use different methods at different times in order to be a successful investor.
There are times when growth investing is best (when you are focused on increasing you capital gains) and there are times when dividend investing is best (when you are trying to generate income from your investments)...and there are also times when no type of investing will work.
When it came time for me to start dividend investing, I knew that I did not want to reinvent the wheel. Using Investor's Business Daily (IBD) made stock selection much, much easier, and added the element of "timing" to the mix.
Timing addressed one HUGE frustration I had with investing; spending a lot of time researching and finding the perfect stock, only to watch the break-out fail and quickly hand you a 7% loss.
I also knew that IBD rules would not work for dividend investing. Why? Because those rules were created as a technique for growth investing.
So I wanted a rule-based method, similar to IBD, but for dividend investing.
The author has done a great job laying out the criteria needed for success and his selection method/process. Since safe investing is all about the process, this site is a fantastic resource.
Rather than reinvent the wheel, I leverage the authors knowledge and apply it myself (much like I force you to do by supplying a pdf of a personal income statement, rather than an editable excel file).
To me, income investing is an important strategy, whether you're just starting out or about to retire; a key step on your road to financial freedom. Remember that financial freedom is covering your monthly expenses using your assets (not using your paycheck).
External factors affect all investments. The economy, interest rates, income taxes, unemployment, and all the other stories you hear on the 6 o'clock news impact your ability to make money. The good news is that they are out of your control, and are constantly changing, so they have less impact of dividend investing than growth investing.
The reason the external factors have less impact is because you will be looking for companies that have been able to provide quality dividends for a long time, regardless of market changes.
Dividend investing has a long-term timeframe. Most dividend investments payout on a quarterly (3 month) basis, so market conditions can change dramatically in between payments.
If you can find companies that have done well in all market conditions, odds are that they will continue to do so. Just remember that this is not a guarantee, but does increase the probability of success.
Internal factors are the ones that let you know which companies have done well in all market conditions...sort of like the factors you are monitoring with your personal financials statements. I call them internal because they are internal to specific company.
Again, relying on the dividend growth investor website, these are the things you should be looking at when selecting your dividend stock.
For more in-depth information, such as how "high" is a high return on equity, check out the Dividend Growth Investor's post on the 5 metrics of Successful Dividend Investing
And yes, it does sound like a lot of work, and that is because it IS a lot of work. But my site is about saving you time. So here are three filters you can use to screen potential dividend stocks before you ever start digging through their data.
If you use these lists (Achievers, Champions, Aristocrats, and Kings), a lot of the legwork has been done for you. But you still need to do your homework, because the lists aren't perfect.
Here is a great article from Seeking Alpha on how stocks are selected for the different lists mentioned above and what is meant by "raising dividends"