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.
Earn More Than 7% from This High-Dividend Stock Time and time again, the real estate sector is one that pops up on investors’ radars. Real estate has many different ways of earning returns on one’s money; investors should focus on.
Here’s Why You Should Take a Look at Apple Stock Right Now Consumers love Apple Inc.’s (NASDAQ:AAPL) products, but Apple stock doesn’t always get the same response from investors. Since last week’s earnings report, AAPL stock has slipped nearly four.
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Earn More Than 5% From This High-Dividend-Paying Stock When it comes to small-cap companies, it is very difficult to find companies that can be held forever in one’s portfolio. After all, for dividend investors, the most important thing is earnings.
Top Monthly Dividend Stock for 2017 If your main motivation to invest is to earn a top monthly dividend, then your options are limited. Most of the top dividend-paying stocks distribute payouts quarterly, which may not match with your monthly.
Ford Stock Could Be a Bet for the Future Ford Motor Company (NYSE:F) is a well-known name for income investors. When a lot of companies yield next to nothing, Ford stock’s 5.12% dividend yield stands out. But everyone still remembers.
What Will Drive BAC Stock Higher? Bank of America Corp (NYSE:BAC) is a company dividend investors should consider taking a look at. Shares of BAC stock have been stuck in a trading range for the last three years, with the.
Royal Dutch Shell plc (NYSE:RDS.A)(NYSE:RDS.B) has a problem. Management doesn’t want to admit it. But underneath the surface, a real issue is unfolding at the oil major. Any investor counting on the company’s big dividend could be in for a.
GM Stock Should Be Taken Seriously by Dividend Investors With the markets swinging between being in the green and in the red every day, it can hard to find a company that is in the news for the right reasons..
Introduction to Dividend Investing Ultra-low interest rates and a choppy, long-in-the-tooth bull market have made dividend investing tougher than ever. For buy-and-hold investors, dividend growth stocks can provide a steady, increasing income stream and protect against short-term volatility. But the.