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.
This High-Yield Stock Hasn’t Been an Investor Favorite We know that real estate can be a great place to earn a passive income, but this high-yield real estate stock doesn’t seem to be an investor favorite. I’m talking about Washington.
A High-Yield Healthcare Stock If you want to earn more dividend income from the stock market, then you need to start investing in healthcare. Analysts project that the number of Americans 65 and older will double by 2060. That means.
Is This 13% Yield Too Good to Be True? Today I’m highlighting a double-digit yielder that most people have never heard of: USD Partners LP (NYSE:USDP). Headquartered in Houston, Texas, USD is in the midstream energy business. Structured as a.
You Can Milk These Dividend Stocks for Bigger Yields If you want to earn more income in the stock market, then you want to invest in this quiet niche: “cash cows.” Regular readers know I write about these firms often..
Time to Check Out T Stock Would you be interested in owning shares of a century-old company that saw its stock price plunge more than 15% over the past two years? I assume a fair portion of you would answer.
Earn a 12% Yield From This “Alternative Bank” During my hockey career, I played center because of my ability to create opportunities. I had a knack for scoring goals and finding the open ice. I lived by NHL Hall of.
This Little-Known Stock Offers a Big Payout To most people, CM Finance Inc (NASDAQ:CMFN) won’t sound like a familiar name. But if you are looking for oversized dividends, this little-known stock might deliver a nice surprise. Headquartered in New York.
Why Procter & Gamble Stock Deserves Your Attention Dividend investors are no stranger to Procter & Gamble Co (NYSE:PG). The company has been around for over a century and has paid increasing dividends for decades. But this earnings season, investors.
1 High-Yield Stock to Think About Most people have never heard of KNOT Offshore Partners LP (NYSE:KNOP), but for income investors, it could be one of the most solid high-yield plays on the market. Founded in 2013, KNOT Offshore Partners.
Will Costco Issue a Special Dividend Payment? As I’ve expected for years, Wall Street has started to catch on to the income potential at Costco Wholesale Corporation (NASDAQ:COST). In a research report published after the company’s recent earnings release, Guggenheim.