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.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Hand holding pound notes

Image source: Getty Images.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

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. Here, 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 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’s never any guarantee they’ll 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.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Mixed-race female couple enjoying themselves on a walk
Investing Articles

A once-in-a-decade chance to get rich buying growth stocks?

We haven't seen a good spell for growth stocks for quite a few years now. But I reckon the signs…

Read more »

Young Asian man drinking coffee at home and looking at his phone
Investing Articles

The FTSE 100 is full of bargains! Here’s 1 stock I’m eyeing up

A weak economic outlook has hurt the FTSE 100. This Fool explains why she likes the look of this consumer…

Read more »

Investing Articles

2 no-brainer beginner FTSE 100 stocks to buy for my portfolio

Getting started with investing can be daunting. Here are two stocks for beginners to consider buying to build their first…

Read more »

Young black man looking at phone while on the London Overground
Investing Articles

2 recession-resistant UK shares investors should consider buying

Our writer details two UK shares she feels could withstand some of the ill-effects of the current malaise to provide…

Read more »

Tanker coming in to dock in calm waters and a clear sunset
Investing Articles

Glencore share price drops on results. Time to buy?

The Glencore share price wobbled a bit after a weak set of 2023 results. Here's why I have the stock…

Read more »

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper
Investing Articles

Big trouble in China sinks HSBC shares. Should I invest after record FY results?

HSBC shares have slumped following a disappointing end to 2023 for the FTSE stock. Royston Wild explains why this may…

Read more »

View of Tower Bridge in Autumn
Investing Articles

3 dirt cheap FTSE 100 shares to snap up today?

The FTSE 100 is rallying, but many shares still look super cheap on fundamentals. Is our writer buying these three…

Read more »

Black woman using loudspeaker to be heard
Investing Articles

FTSE 100 earnings: what can we expect from Rolls-Royce in 2024?

The Rolls-Royce share price tripled in 2023. Roland Head wonders whether this FTSE 100 stock could continue that impressive trajectory…

Read more »