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.
These High-Yield Dividend Stocks Still Have Respectable Payouts The stock market has soared lately, but you probably knew that already. Why it has soared is important. And while you can point to dozens of explanations, a big one is a.
This High-Yield Stock Looks Interesting Smaller stocks can sometimes provide bigger yields, with AllianceBernstein Holding LP (NYSE:AB) serving as the latest example. AllianceBernstein is an investment management firm headquartered in New York City. Compared to the big-name asset managers like.
Income Investors: Here’s Why NextEra Energy Inc Needs to Be on Your Watchlist It’s another quarter on the books. And it’s another round of record profits from NextEra Energy Inc (NYSE:NEE). Longtime readers know I only cover top dividend stocks.
KO Stock Remains a Top Pick for Income Investors In an era when short-term profits seem to be all the rage, long-term investors may feel a bit lost. Think about it: companies often have to focus on getting good results.
This High-Yield Stock Could Be Special With the COVID-19 pandemic sending shock waves across the economy and the financial markets, healthcare stocks are getting a lot of attention. Not only is the sector known for being more recession-proof than most.
These High-Yield Stocks Keep Beating the Market From speaking with many of my readers, I know that virtually all of them want to earn more income from high-yield stocks. Interest rates have plunged to record lows. Blue-chip dividend stocks pay.
A Simple Lesson on Finding Top Dividend Stocks Here’s one of the best pieces of advice for spotting top dividend stocks that I have ever received. “You want to know the two most important words when it comes to identifying.
A Reliable Dividend Stock for Income Investors Before the COVID-19 pandemic, there were a lot of companies known for providing increasing dividends. But since the virus hit, things got so bad that some of those companies had to cut their.
Can You Trust Preferred Apartment Communities Inc.’s Distribution? I loathe companies that slash their dividends, but once in a while I make an exception. Firms, after all, tend to resist cutting their payouts to shareholders. So if a management team.
This High-Yield Stock Looks Interesting If you didn’t pay much attention to Sachem Capital Corp (NYSEAMERICAN:SACH) in the past, that’s okay. But with recent developments, the company now deserves income investors’ attention. Allow me to explain. Headquartered in Branford, Connecticut,.