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.
Searching for High-Yield Stocks? Read This In today’s low-interest-rate environment, finding reliable high-yield stocks can be a challenge. The reality is, when fixed income investments pay next to nothing, everyone wants to collect oversized dividends. So if a company offers.
Dividend Stocks Delivering Recession-Proof Income? COVID-19 has pushed the U.S. economy into a recession, but you probably already knew that. Rolling shutdowns forced millions to shutter their businesses this spring. And with little in the way of cash coming in,.
1 Reliable Dividend Growth Stock to Think About Auto sales are cyclical. And that means when the economy is struggling due to the COVID-19 pandemic, companies in the automotive industry aren’t doing that well. Earlier this year, both General Motors.
Hershey Co’s Expansion Should Satisfy Investors’ Cravings for Returns, Dividends For decades, people have enjoyed Hershey Co (NYSE:HSY): getting some “Reese’s Pieces” in your Halloween loot; biting into a “Kit Kat” bar at break time; chowing down on “Milk Duds”.
1 High-Yield Stock to Think About In today’s low-yield environment, it’s no secret that down-and-out stocks offer the biggest yields. The problem, of course, is that these stocks often plunged for a reason. And if investors are not careful, they.
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.