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.
These Top Dividend Stocks Pay up to 7.8% Investors face a lot of unknowns heading into November: the results of a hotly contested presidential election; a potential third wave of COVID-19; a looming wave of corporate and consumer bankruptcies. But.
A Reliable Dividend Stream That Keeps on Growing It would not be an exaggeration to say that the COVID-19 pandemic had a devastating impact on the American restaurant industry. In March, many state and city officials announced executive orders to.
A Special High-Yield Stock? Fidus Investment Corp (NASDAQ:FDUS) hasn’t exactly been a market favorite this year. But for yield hunters, the stock offers the potential to earn an oversized payout. Allow me to explain… Fidus Investment Corp is structured as.
New to Income Investing? These High-Yield Dividend Stocks Pay up to 21% When it comes to income investing, the biggest thing holding most people back is fear of the unknown. What if COVID-19 crushes the economy? What if the November.
FRT Stock Deserves a Special Look In the world of dividend stocks, there is one group of companies that stands out: the “Dividend Kings.” These are companies that have increased their dividend every year for at least 50 years. Just.
Blue-Chip Stock Offering a Discount? If you’ve been hunting for yield, you’ve probably noticed that the biggest payouts are often found among beaten-down stocks. The reason is simple: at a given cash dividend payout, a company’s dividend yield moves inversely.
Analyst Forecasts: Costco Wholesale Corporation Could Soon Pay Special Dividend For the past year, I have been predicting that Costco Wholesale Corporation (NASDAQ:COST) would soon issue a special dividend. Now it seems some folks on Wall Street are starting to.
Starbucks Corporation Bouncing Back from COVID-19 Pandemic? Starbucks Corporation (NASDAQ:SBUX) has struggled this year with a recession, rolling shutdowns due to COVID-19, and plunging revenues. But management, it seems, isn’t too concerned. In a recent press release, executives announced they.
Looking for Oversized Yield? Read This In today’s market, what could be better than a company that offers an annual dividend yield of 12%? The answer: a 12% yielder that pays investors every month. Sound too good to be true?.
JPMorgan Chase & Co., Goldman Sachs Group Inc Earnings Shock Wall Street Analysts The COVID -19 pandemic has pushed millions of Americans into bankruptcy. Hundreds of thousands of small businesses will close their doors for good. Analysts have forecasted a.