Dividend Stocks

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.

The Most Important Thing in Income Investing

Something More Important Than Yield and Payout Ratio? In the past several years, the ultra-low-interest-rate environment hasn’t been that great for income investors. Because fixed-income products didn’t pay much, more and more investors found themselves adding dividend-paying stocks to their.

UTX Stock Rewards Dividend Investors

Earn a Growing Dividend from UTX Stock Can United Technologies Corporation (NYSE:UTX) stock satisfy the needs of dividend investors? One way to receive a return on the capital that you have invested into a company is by collecting a dividend..

Visa Stock Is a Top Dividend Growth Stock

Dividend Growth from Visa Stock Visa Inc (NYSE:V) stock is the largest payment technology company in the world. The list of clients for Visa is endless, from financial institutions to merchants to government entities. When it comes to shareholders, they.

TD Stock Is a Must-Own for Dividend Investors

Why Dividend Investors Should Consider This Bank Stock Dividend investors are not strangers to the financial services industry. But while there are plenty of American banks paying handsome dividends, investors shouldn’t ignore this solid company north of the border. I’m.

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