So, what are dividend stocks? This method of investing simply involves paying out a dividend or a small percentage of their earnings to their stock holders. So, by buying a dividend stock you are able to get some sort of income from the stock market.

Of course just because a stock pays off a dividend does not mean it is a good investment. Instead of going out and find a list of dividend paying stocks and buying ever stock on that list with both hands it can be much better to look at how strong the company is.

This way you do not wind up with a stock that is paying a good dividend, yet going to go bankrupt tomorrow.

So what is the deciding factor? What makes a good investment? Well everybody has their own opinions on how to find the best companies. But I like the idea of value investing myself, it is a time tested method of finding good quality companies.

This method involves using techniques such as the P/E ratio to help you to find stocks that will probably go up in future. It also helps you to find companies that are fundamentally strong and will probably not go under.

The best part about combining these two strategies is that as the price of the stock grows the dividend will also grow. It is also a very passive approach to the stock market, which can be good, if you do not want to spend your time in front of a computer trying to catch every up and down.