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.
“Smart Money” Buying This Stock Bill Gates, one of the richest men in the world, has access to any number of private investments. Just by picking up the phone, he can get in on any opportunity that would be totally.
A Reliable Income Stream Yielding More Than 10%? In the U.S., the largest expense for the average family is housing. So unsurprisingly, to many homeowners, mortgage payments represent the biggest financial burden. In this article, I’m going to show you.
This Double-Digit Yield Looks Interesting If you have been following this column, you would know that master limited partnerships (MLPs) have become some of the highest yielders in the current stock market. Most MLPs come from the midstream energy sector..
A Choppy Ride for Intel Stock So far into 2018, the stock market seemed to have a hard time putting a price tag on Intel Corporation (NASDAQ:INTC). The company started the year trading at $46.85 apiece, then went to as.
These Stocks Yield Up to 14.2% A large portion of the wealth in the Maritime region of Canada sits in the hands of the billionaire Irving family. Their empire reaches across the entire local economy, with operations in everything from.
Should Investors Consider This Double-Digit Yield? In today’s market, a lot of ultra-high dividend yields are simply byproducts of terrible stock price performances. But Fidus Investment Corp (NASDAQ:FDUS) is a nice exception. Headquartered in Evanston, Illinois, Fidus is an externally.
Is This 7.6% Yield Safe? Readers sometimes ask why I would recommend a stock that recently slashed its distribution. After all, for the most part, companies hate cutting their payouts. So slashing the dividend probably signals a big problem. That.
1 Energy Stock with 19 Consecutive Payout Increases Phillips 66 Partners LP (NYSE:PSXP) stock does not make headlines very often. But over the years, it has provided investors with one of the fastest-growing income streams in the energy sector. Consider.
A High-Yield Stock You Likely Haven’t Heard Of If you have been following this column, you would know I’m a big fan of utility stocks. These companies usually have stable business models. With predictable cash flows, many utilities can pay.
These Retirement Stocks Pay Big Dividends For the most part of the last decade, the U.S. Federal Reserve has kept its benchmark interest rates at artificially low levels. As a result, retirement investors had a hard time finding a decent.