Dividend Stocks
Stocks that provide dividends are an excellent way to build long-term wealth. Not only do dividends provide investors with regular income, but dividend stocks can also help investors weather market volatility. How? Whether the markets are going up, down, or sideways, dividends provide investors with a steady income stream.
Having said that, while dividends are usually paid out quarterly, at the discretion of the company’s board of directors, they can be raised, cut, or eliminated.
Not all dividend stocks are created equal. As a result, there are a number of factors investors need to consider when looking at dividend stocks.
Dividend yield is one of the most important factors to consider when investing in dividend stocks. It might be tempting to just invest in a stock with the highest dividend yield, but there is a risk/reward trade off when it comes to dividend-yielding stocks—the higher the yield, the greater the risk.
Stocks that provide an annual dividend of 10% or more tend to be very risky. Because they are risky, there is a greater chance the dividend could be cut—or worse, the share price could plummet. This means investors lose out on dividend growth and capital appreciation.
History is another important factor to consider. Look for stable companies that have a long history (five, 10, or even 25+ years) of both paying an annual dividend and increasing that dividend annually. Those stocks that offer annual dividend growth as part of their corporate culture are more likely to continue that trend.
The best way to determine whether or not a company can continue to provide an annual dividend and raise its yield is to look at the company’s free cash flow. Free cash flow is the amount of free cash, or money left over after it pays for operations and necessary capital expenditures. The more money a company has in the bank, the greater the chances are that it can sustain or increase its high dividend yield.
Costco Wholesale Corporation: Up 45% Already, More to Come?
This Dividend Stock Looks Special In an era when there’s no shortage of fast-growing industries, who would have thought that a decades-old brick-and-mortar retailer would see its share price shoot through the roof? But it is happening. Just take a.
Is This Dividend Stock the Next Berkshire Hathaway Inc.?
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Genesis Energy, L.P.: Lock in a 9.9% Yield by October 29?
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ConocoPhillips: This 38% Dividend Hike Is No Joke
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This Little-Known Dividend Stock Has Raised Its Dividend for 20 Years
This Dividend Stock Keeps Beating the Market; Here’s Why For the past 20 years, this little-known dividend stock has provided a lucrative income stream. Yet I’ll bet dollars to donuts most people have never heard of it. This business has.
PennantPark Investment Corp.: An 11.8% Yielder Most People Have Never Heard of
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Retirement Income: 3 Monthly Dividend Stocks Yielding Up to 17.3%
Monthly Dividend Stocks Pay Reliable Retirement Income If you’re looking to generate retirement income from your portfolio, then you have probably run into this problem: infrequent distributions. Most dividend stocks pay dividends on a quarterly basis. Bonds do even worse,.
Paychex, Inc.: Strong Earnings Could Translate to More Dividend Hikes
This Dividend Stock Deserves a Look It’s early October, so the earnings season is yet to be in full swing. However, since companies follow different fiscal years, some of them report earlier than others. One company that recently released its.
Insiders Quietly Buying JPMorgan Chase & Co.
Heavy Swarming Over JPMorgan Chase & Co.: Here’s Why If you want to make a lot of money in the stock market, it pays to follow the actions of insiders. As an investor, I like it when executives put their.
New York Mortgage Trust Inc: Why This 13.3% Yield Deserves a Second Look
NYMT Stock Offers a Jaw-Dropping Payout For investors looking for big capital gains, New York Mortgage Trust Inc (NASDAQ:NYMT) once didn’t seem to provide much. A year ago, the stock was trading around $6.00 per share. Today, it’s at $6.02..
