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.
Microsoft Stock Pays Secret 5.7% Yield Income investors are no stranger to Microsoft Corporation (NASDAQ:MSFT) stock. In today’s ultra-low-interest-rate environment, the software giant’s 2.7% dividend yield certainly makes it attractive. But that’s not all; do you know that Microsoft stock.
Why CTL Stock is a Fantastic Income Opportunity for Investors Centurylink Inc (NYSE:CTL), more commonly called CenturyLink, is a telecom that operates in 45 American states. CTL stock is a fantastic opportunity for income investors because it achieved a 7.78%.
ED Stock: Stable Business Model Provides Consistent Dividend Payouts Consolidated Edison, Inc. (NYSE:ED) stock is a blue-chip U.S. utility stock with a long and impressive dividend history. In fact, the company has increased its dividend every year for the past.
The Top “Buy-and-Hold” Stocks Buy and hold stocks are definitely underrated. Some investors spend copious amounts of time tracking their investments and hoping their value increase. Then there are dividend investors. Sure, they like watching the value of their stocks.
JNJ Stock: Dividend Hike is Almost a Done Deal You can’t find many companies on Wall Street which satisfy income investors through paying regular dividends year after year. Johnson & Johnson (NYSE:JNJ) stock, with more than half a century’s history.
Coca Cola Stock: 53 Consecutive Years of Dividend Hikes In today’s low-interest-rate environment, value picks are hard to find for income investors. That’s why when The Coca-Cola Co (NYSE:KO) stock is having a downturn, it deserves the attention of income.
MO Stock Ups Share Increase on Takeover Windfall Altria Group Inc (NYSE:MO) stock hovered near the flat line on Tuesday, which at first might not seem out of the ordinary. But in the proper context, which is that the S&P.
CAG Stock’s Stable Earnings Provide Cash for Share Buybacks ConAgra Foods Inc (NYSE:CAG) stock gained one percent in pre-market trading Tuesday, when the company announced a $1.25 billion share repurchase authorization. (Source: “BRIEF-Conagra Foods says board of directors approves conditional.
Altria Group Inc (NYSE:MO) stock is the ultimate “cash cow”. This company gushes income. Long-time shareholders are collecting yields on cost of 20%… 52%… even 109%. Better yet, these payouts are stable like regular bond coupons. My philosophy? Hold it,.
Data Shows Growth in Dividend Payouts Slowing S&P 500 companies are well on track to close a record year when it comes paying dividends to their investors this year, but the pace of dividend increases is slowing down, according to.