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.
Randgold Stock Surges 5.5% Donald Trump’s surprise victory over Hillary Clinton has sent shockwaves across the stock market. Many stocks tanked, but there were also winners, such as Randgold Resources Ltd. (ADR) (NASDAQ:GOLD) stock. Randgold stock opened with a 7.82%.
Pfizer Stock: Benefiting From Trump Healthcare Policies Pfizer Inc. (NYSE:PFE) stock is one of the biggest gainers from Donald Trump’s surprise victory in the U.S. presidential race on speculation that his term will be less hostile to pharmaceutical and biotech.
Intel Stock: Emerging Strongly From PC Market Downturn Investors haven’t been bullish on Intel Corporation (NASDAQ:INTC) stock this year, as one of the top chip-making companies struggles to cope with a slowing demand for personal computers. But by focusing on.
This MLP Has Raised Its Payout Every Quarter Since IPO Master limited partnerships, or MLPs, are Wall Street’s best-kept secret. They provide much higher dividend yields than most companies and their payouts seem to be only growing. Today, I would.
SBUX Stock: Strong Enough for Dividend Investors? The consumer staples sector is a popular choice for dividend investors because no matter how the economy is doing, the sector’s cash flows remain steady and grow over time. Starbucks Corporation (NASDAQ:SBUX) is.
Long-Term Dividend Stocks for 2017 Investing in top-quality dividend stocks is what a lot of successful investors do over their lifetimes. This class of investor has just one goal in mind while picking investments: stability in a company’s cash flow.
PepsiCo Stock: 44 Years of Consecutive Dividend Hikes Defensive stocks don’t sound very exciting, but they could be a great fit for an income portfolio. PepsiCo, Inc. (NYSE:PEP) stock is a good example. The reason to own defensive stocks is.
Can Investors Benefit From This High-Dividend Stock? When income investors look for high-dividend stocks, real estate is one of the first sectors that they look towards to satisfy their needs. However, an issue lies in that many real estate companies.
Top 5 Retirement Stocks Yielding Up to 8.04% The current situation isn’t the greatest for retirees and those planning to retire. When the 10-year Treasury note is yielding a measly 1.83%, you probably want to add something else to your.
RIOCF STOCK: A Monthly Dividend Stock That Shouldn’t Be Ignored Many income stocks typically pay long-term shareholders on a quarterly basis, but there are companies that pay a monthly income instead. Canadian business RioCan Real Estate Trust Units NPV (OTCMKTS:RIOCF).