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.
Top 10 Stocks to Watch in 2017 With interest rates expected to rise next year, many investors may be asking what will be the best dividend stocks in 2017. The 10 best dividend stocks of 2017 will be large-cap stocks.
PSX Stock Benefiting From Diversification Phillips 66 (NYSE:PSX) stock is one of the top performers for dividend investors in the energy space, given the current roller-coaster in the oil markets keeping investors on the sidelines. Those who were betting on.
Nucor Stock Announces Cash Dividend As the largest steel manufacturer in the United States, Nucor Corporation (NYSE:NUE) has a long history of profitability and paying dividends. NUE stock provides the income investor with both a solid dividend and the potential.
Microsoft Stock Boosts Returns to Investors Microsoft Corporation (NASDAQ: MSFT) stock jumped more than one percent in after-hours trading on Tuesday. Why? The company just made an important announcement. On Tuesday, Microsoft announced that its board of directors has declared.
Target Stock: An Industry Leader Target Corporation (NYSE:TGT) is one U.S. retail leader that elicits mixed reactions from investors. Given the challenging retail environment, it has been difficult for Target Corporation stock to maintain consistent earnings improvements in the recent.
Wal-Mart Stock: Can the Traditional Retailer Be Future-Proof? Wal-Mart Stores, Inc. (NYSE: WMT) stock isn’t exactly a hot commodity these days, and the reason is simple: with the fast-growing e-commerce industry, investors don’t believe that the retail giant will be.
ADM Stock Expected to Finish the Year Strong Despite a volatile start to the year, Archer Daniels Midland Company (NYSE:ADM) stock has steadily outperformed the broader market by a wide margin. Since the beginning of the year, ADM stock has.
HCP Stock: A REIT With History of Higher Returns If you’re on the hunt for higher-yielding dividend stocks, investing in a real estate income trust (REIT) is one way to achieve that goal. And if you want to play it.
AT&T Stock: Raising Dividends for 32 Consecutive Years Income investors are no stranger to AT&T Inc. (NYSE: T) stock. With a 4.8% dividend yield, AT&T stock looks like a solid dividend pick. But most recently, the stock hasn’t performed that.
Kimberly-Clark Corp (NYSE:KMB) stock has a great reputation as a value and growth stock, but it is also a great dividend play for income investors. The paper products maker’s dividend has been growing steadily for the past five years. Back.