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.
CVS Stock Benefits From Shareholder-Friendly Management CVS Health Corp (NYSE:CVS) stock operates in the American retail pharmacy and health care sector. As an income investor, the desire is always to find a top dividend growth stock. This is because, as.
Energy Stocks to Invest in If you have been following the market in recent years, you would know that energy stocks are not exactly hot commodities. Since the downturn in oil prices started in the summer of 2014, many energy.
Stocks That Are Cheap Dividend Aristocrats One common experience for many people is buying a big-ticket item, such as a car. Such experiences often require hours on the Internet and visiting stores—in this case, dealerships—to get as much information as.
HD Stock Continues to Reward Shareholders Home Depot Inc. (NYSE:HD) stock is a company that investors should take seriously. Being quite a large company, there could be some aspects of the business that go unnoticed when researching the company. As.
GILD Stock is Trading At An Attractive Valuation Gilead Sciences, Inc. (NASDAQ:GILD) stock is down over 25% over the past year. Is now the time to consider this stock? One of the most important aspects that investors should consider before.
Warren Buffett and T. Boone Pickens Are Bullish on KMI Stock One company that investors should take a serious look into is Houston, Texas-based Kinder Morgan Inc (NYSE:KMI) stock. Kinder Morgan is one of the largest pipeline companies in the.
2017 Could Be Huge for American Express Stock Lately, momentum seemed to be going strong for American Express Company (NYSE:AXP) stock. In just the last three months, it climbed a solid 26.5%. But if you look a bit further back,.
A New Catalyst for Verizon Stock? For the most part, Verizon Communications Inc. (NYSE:VZ) stock is not really considered to be at the frontier of technology. Founded as Bell Atlantic, the telecom giant has been in existence for over 30.
Any More Upside for BAC Stock? Our Income Investors readers are up 40% in two months. And it’s not from some option or junior miner, either. It’s from blue-chip Bank of America Corp (NYSE:BAC) stock. Shares are surging to new.
MA Stock Continues to Reward Shareholders Mastercard Inc (NYSE:MA) stock is a unique financial services company located in the U.S. but with a global presence. MasterCard is a company that should not ignored by income investors. Operating in a favorable.