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.
Why VICI Stock Could Turn Investors Into Big Winners There are a few industry tailwinds juicing the outlook for real estate investment trusts (REITs) like VICI Properties Inc (NYSE:VICI). First, the Federal Reserve is expected to start cutting interest rates.
IRM Stock Is Worth Watching If Iron Mountain Inc (NYSE:IRM) put the word “Energy” or “AI” in its name, the company might get a lot more attention from investors. Despite its reliable, high-yield dividends and share price that’s been kicking.
LAMR Stock Should Be on Investors’ Radar Ever since the Federal Reserve announced last November that it was done raising interest rates for this economic cycle—and that it would start cutting interest rates in 2024—the broader stock market, particularly real.
Uniti Group Inc Is an Underperforming REIT Looking to Improve Interest rates are likely to begin heading lower in June, and there could eventually be a total reduction of 100 basis points. The downward move will benefit companies with high.
Spok Stock Recently Hit Record High & Is Set for More Gains Spok Holdings Inc (NASDAQ:SPOK) is an excellent high-yield health-care stock that seems to slip under the radar. I don’t often hear investors talk about how great the company.
GTY Stock Has a Bright Outlook for the Next Year With the Federal Reserve expected to start making interest rate cuts in the coming months, income-starved investors have been turning their attention back to real estate investment trusts (REITs). And.
Why PAA Stock Is Worth Considering Energy stocks have been some of the biggest winners over the last few years. And while oil prices took a breather in the last quarter of 2023, falling by more than 20% in that.
Industry Tailwinds Bode Well for Torm PLC Marine shipping companies, including Torm PLC (NASDAQ:TRMD), have recently taken center stage, with Houthi attacks in the Red Sea forcing cargo vessels to reroute around the southern tip of Africa. An estimated 30%.
Plains GP Holdings LP Renewing Its Dividend Growth The COVID-19 pandemic in 2020 had negative impacts on many companies, especially those that pay dividends. That was the case with Plains GP Holdings LP (NASDAQ:PAGP), but things have been improving for.
High Demand for Energy Is Set to Boost USAC Stock Since oil and natural gas prices can be volatile, many energy stock prices are, too. One industry that tends to do well no matter what price energy is trading at.