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.
Walmart Stock Returning More Cash to Investors? When the market seems to be on the edge of a cliff—like what’s happening right now—it’s a good idea to check out some solid dividend growth stocks. Walmart Inc (NYSE:WMT), for instance, has.
Why Warren Buffett Invested $29 Billion in Bank of America Stock This company has long topped my list of the best dividend stocks. And apparently, legendary investor Warren Buffett feels the same way. In July, Buffett’s holding company Berkshire Hathaway.
This Ultra-High Yielder Deserves a Look It’s no secret that there are plenty of high-yield stocks on the market. But it’s also no secret that investors aren’t really buying them. The reason is simple: stocks that offer the biggest payouts.
Texas Instruments Stock Has Become an Income Machine If you don’t own Texas Instruments Incorporated (NYSE:TXN), you’ll probably be kicking yourself in 10 years. That might sound like a bold statement, given the chipmaker’s struggles in recent months. But in.
Looking for Dividend Growth? Read This When Apple Inc. (NASDAQ:AAPL) started paying dividends again in 2012, not everyone was impressed. To some people, what a fast-growing tech company should do is invest every dime it has into growing its business,.
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Finally, a Safe High-Yield Stock Dividend investors treat high-yield stocks like children treat cookies: they can’t get enough. High-yield stocks generally represent low-quality businesses. Like sweet treats, the adult in all of us needs to avoid these temptations. But once.
Union Pacific Corporation Hikes Dividend 10%. Are More Hikes Coming? Wall Street has fretted this summer over trade tensions, a looming business slowdown, and a possible war with Iran. But Union Pacific Corporation (NYSE:UNP), it appears, may have missed the.
Looking for Ultra-High-Yielding Stocks? Read This In today’s market, most investors would be thrilled to earn an annual dividend yield of 11.3%. But with this particular stock, there’s a decent chance that investors will earn an even higher yield on.
Beaten-Down Altria Stock Still Paying Dividends Investors once considered shares of Altria Group Inc (NYSE:MO) to be a safe, reliable investment. But no longer. For decades, the cigarette giant has navigated new regulations, higher taxes, and declining smoking rates. Now.