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.
T Stock: Top Dividend-Paying Aristocrat AT&T Inc. (NYSE:T) stock is one of those few mega-cap players that also rewards their investors with a big dividend yield. Its very attractive 4.91% dividend yield is one of the main reasons I like.
Intel Corporation (NASDAQ:INTC) stock is not the most exciting tech stock, but it does offer a decent return for income investors. With a quarterly dividend rate of $0.26 per share, Intel stock has an annual dividend yield of 2.77%. But.
What is Behind JPM Stock Performance? JPMorgan Chase & Co. (NYSE:JPM) reported today that shares of JPM stock are trading higher. JPMorgan easily topped profit and revenue forecasts, as net income came in at $6.3 billion, or $1.58 per share..
Top Dividend Stocks to Own For 2017 Nobody likes a recession, especially when the stock market is at its peak and credit is so cheap. But the reality is that all boom times have to face an end. So if.
KMB Stock is a Stock to Own Forever? There are not many people that investors look to and observe, but one that always deserves attention is Warren Buffett. Time and time again, the “Oracle of Omaha” tends to repeat the.
Warren Buffett Poured Millions Into This Stock No doubt, Warren Buffett is one of the best investors on Earth. Buffett took control of Berkshire Hathaway (NYSE: BRK.A) in 1964, transforming the small textile manufacturer into a sprawling business conglomerate. Over.
CVX Stock: Oil Price Increase Improves Fundamental Recovery Chevron Corporation (NYSE:CVX) stock has suffered mightily from the drop in oil prices over the past two years. After hitting a peak above $100.00 per barrel, U.S. oil prices have declined by.
WFC Stock Beats Quarterly Earnings Estimates Wells Fargo & Co (NYSE:WFC) reported better-than-expected quarterly earnings results on Friday before the bell and WFC stock initially gained one percent at the open on Friday morning. However, those gains did not last.
JPM Stock Beats Quarterly Earnings Expectations JPMorgan Chase & Co. (NYSE:JPM) stock opened up two percent in early market trading Friday after the banking behemoth reported better-than-expected quarterly earnings results. (Source: “JPMorgan’s Results Beat Estimates, Propelled by Investment Bank,” The.
Has Disney Stock Lost Its Magic? There is no other way to put it: Walt Disney Co (NYSE:DIS) stock has performed terribly this year. In just the past three months alone, Disney stock tumbled 8.9%. Even the most diehard Disney.