Dividend investing can be a very profitable strategy and is very popular. But there are a few disadvantages to just going out and finding a list of dividend paying stocks and start buying like crazy.

For one thing it takes a lot of money to make any real income from dividends. You might need half a million dollars or more just to make anything resebling a livable income.

It is true that you can make a passive income by buying great dividend paying stocks, but that does not mean that it is an easy goal. To make a living this way an investor has to either already have a lot of money or save up a lot of money.

The second problem with just going out and buying great dividend paying stocks is that they may not be strong companies. Not every dividend stock out there is worth investing money into.

It is no good to buy a strong stock that is paying out a huge dividend if that stock will simply go bankrupt in the next couple of months.

So, how would an investor get around these challenges? Simple, by using fundamental indicators to determine how strong a company is and to invest only in the most stable companies you can help to fix both of these problems.

If a company is stable they are not going to go under in the next few months which means that investing in them can be a very profitable ordeal. It can also mean that they have a lot of room to grow.

So by investing in strong companies that pay dividends those companies can appreciate over time and lead to more and more income off of the dividends. This can an investor save up money for many years until they reach a point where they are wealthly enough to do whatever they want with their life.