Dividends investing is a sub-set of equity investing that requires patience, discipline and an appreciation of cash flows. It is certainly not sexy but, because of the cash-rich nature of the product, it appeals to people with a steady-eddie approach to investing.  If you want to become a dividend investor, what are some ideal steps to take?

Educate yourself

There is no single bible of dividend investing but The Ultimate Dividend Handbook is a good start into the ins and outs of dividend investing. There are also many great dividend blogs out there. I would suggest  the following three as a starting point (but, again, there are a lot of great dividend investing blogs). The Dividend Guy is one of the older blogs on the topic and one of the “elders” of the blogging world on this topic. Dividends4life always conducts good fundamental analysis on dividend paying stocks. Money Gardener is not so much a pure dividend blog but one of its major themes is about dividend paying stocks and he shares his thought processes on what it takes to be a good dividend investor.

..then there’s Derek Foster who is a bit of a lightning rod of controversy (or what passes as such in the personal finance blogsphere) by claiming he’s the country’s youngest retiree by living off dividend income. A lot of the focus has actually been on Foster himself and not his methodology so keep that in mind.

…and in a shameless plug, I have a section on dividends which I tend to add to approximately one post a week.

Be a consistent investor

There is some dispute whether dollar cost averaging is actually as wonderful as the financial industry makes it out to be. In the case of dividend investing, I believe it is important to be a consistent investor regardless of share price. At the end of the day, your bird in the hand in dividend investing is your dividend payment. Thus, you are purchasing a cash flow and not an appreciation per se. Assuming that the dividend is sustainable, a cash flow at lower value (i.e.