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.
Contrarian Dividend Play Delivering Big Returns With the U.S. equity market going through another sell-off, who would have thought that a stock from the beaten-down retail industry could soar to a new all-time high? But it is happening. Over the.
Can You Count on Plains All American Pipeline, L.P.’s Yield? Americans love a comeback story: Tiger Woods, Mickey Rourke in The Wrestler, or Michael Jordan’s return to the NBA. The same applies to stocks. You can make a lot of.
One Interesting High-Yield Stock to Think About If you look up Capital Southwest Corporation (NASDAQ:CSWC) on Google Finance or Yahoo! Finance, you’ll see that its stock offers an annual dividend yield of 7.2%. The calculation is simple. These financial Web.
Monthly Dividend Stocks for Retirement Income Let me ask you a question: How much money do you have saved for retirement? It doesn’t matter how much cash you have stashed away; it never quite feels like enough, does it? Low.
Why Wells Fargo Stock Deserves Investor Attention Despite what happened in the last financial crisis, bank stocks generally have a decent reputation among income investors. Even though many banks—including some of the biggest names in the industry—cut their dividends during.
The Best Healthcare Stocks for 2019—and Beyond If you want to earn more investment income over the next 10 years, then you need to pay attention to healthcare stocks. Each month, 300,000 baby boomers turn 65, enough to fill the.
A Rare Find Among Ultra-High Yielders It’s no secret that in times of market uncertainty, dividends can provide investors with peace of mind. It’s also no secret that, when everything else is equal, investors would want to collect a yield.
Insiders Buying Crown Castle International Corp: Here’s Why If you want to make more money in the stock market, it pays to watch the actions of insiders. Executives might sell shares for all sorts of reasons, but they only buy.
Should Investors Consider This High-Yield Stock? In this day and age, it’s quite rare to see a company with an annual dividend yield of over 10%. What’s even rarer is that this double-digit yielder also follows a monthly distribution schedule..
Can You Trust Office Properties Income Trust’s 7.9% Yield? “Nothing can be said to be certain, except death and taxes,” Benjamin Franklin once wrote. Franklin certainly knew what he was talking about. Our world has changed in many ways since.