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.
Yield Hunters Should Not Ignore NS Stock As is the case with most ultra-high yielders, it wasn’t always sunshine and rainbows at NuStar Energy L.P. (NYSE:NS). NS stock used to offer a yield well into the double digits. But in.
A Top Dividend Growth Stock You Likely Haven’t Considered Despite playing a critical role in the modern-day economy, global shipping giant United Parcel Service, Inc. (NYSE:UPS) doesn’t seem to get that much attention from the investing community. The reason is.
Is This 7.3% Yield Safe? As they say in Vegas, “the house always wins.” And in the case of Gaming and Leisure Properties Inc (NASDAQ:GLPI), investors literally own the house. Gaming and Leisure Properties Inc owns a sprawling empire of.
Collect Oversized Dividends From Large-Cap Stocks Let’s be honest here. While everyone wants to capitalize on the growth potential of small-cap stocks, if risk-averse income investors were presented with a choice between companies of different sizes, most of them would.
High-Yield Dividend Stocks Here If you’re searching for high-yield dividend stocks, Canada nears the top of the list. Resource shares, which make up most of that country’s stock index, have fallen out of favor. And with a left-wing government in.
Home Depot Stock Set to Return More Cash to Investors In a soaring stock market, a few percents of dividends may not seem like much. But if you own shares of solid dividend growers like Home Depot Inc (NYSE:HD), continuous.
New Project Pays Yield Earlier this month, Exxon Mobil Corporation (NYSE:XOM) green-lit one of the country’s largest natural gas export facilities. The move is the latest development in America’s energy boom, a trend I’ve been tracking for over five years.
A Top Dividend Stock From an Unlikely Industry Income investors are not fans of uncertainty, which is part of the reason they don’t look at biotech stocks that often. With some biotech companies, their stock’s appeal depends critically on the.
Spotting Top Dividend Stocks My job description is pretty simple: identify the world’s best dividend stocks for thousands of Lombardi Publishing readers. I’ve studied thousands of income investments, from master limited partnerships to real estate investment trusts. I’ve even written.
If You Want to Earn “Bonus Checks” From Stocks in 2019, Read This What could be better than a safe dividend yield of 9.4%? Answer: a safe 9.4% yielder that grows its payout. Is there anything that could be even.