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.
Masco Corp Returning Cash to Investors Making faucets and showerheads may not seem like an exciting business, but the business is capable of returning cash to investors. On March 23, before the bell, Masco Corp (NYSE:MAS) announced that its board.
Good Value for Your Money? For value-conscious income investors, few things are better than a high-yield stock trading at a significant discount. Think about it: at any given cash dividend rate, the higher the stock price, the lower the yield.
Safe Yields Up to 10.1% Most people know Bill O’Reilly for hard-hitting political views, but he can be a source of good investment advice, too. “Dow is down two thousand points from its high,” he told his Twitter followers last.
Milk This Stock for a 10.8% Yield If you’re searching for safe, large yields, this niche of dividend stocks may be worth a second look: cash cows. In business jargon, cash cows amount to mature operations. Because these firms have.
Collect Rising Dividends from a Beaten-Down Industry Every income investor wants to own dividend growth stocks. As a result, companies with an impressive track record of raising their dividends have been highly sought after. And when investors bid up their.
Nike Stock Returning Cash to Investors “Given its rock-solid business, improving earnings, and low payout ratio, I expect the company to announce a double-digit increase to its quarterly dividend rate in the next week or two.” That’s what I told.
AAPL Stock Dividend Forecast With Apple Inc. (NASDAQ:AAPL) stock soaring more than 25% over the past year, the company’s 1.44% dividend yield may not seem like much. But note this: with consistent dividend increases, investors who purchase Apple stock today.
Tiny Niche Yields Up to 13.5% Struggling with low interest rates? You’re not alone. Millions of retirees have seen their income dry up with today’s rock-bottom yields. Saving accounts pay out next to nothing. Bank certificates of deposit yield only.
A High-Yield Stock You Likely Haven’t Considered In a bloated stock market, high dividend yields are hard to find. Consider that, historically, the S&P 500 Index had an average price-to-earnings (P/E) ratio of 15.7 times. Today, the ratio stands at.
JMP Stock Returning Cash to Investors Due to what happened to U.S. banks during the last financial crisis, investors may have second thoughts about putting their money in bank stocks. But in recent years, the U.S. banking industry has made.