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.
Insiders Buying Crown Castle International Corp: Here’s Why If you want to make more money in the stock market, it pays to watch the actions of insiders. Executives might sell shares for all sorts of reasons, but they only buy.
Should Investors Consider This High-Yield Stock? In this day and age, it’s quite rare to see a company with an annual dividend yield of over 10%. What’s even rarer is that this double-digit yielder also follows a monthly distribution schedule..
Can You Trust Office Properties Income Trust’s 7.9% Yield? “Nothing can be said to be certain, except death and taxes,” Benjamin Franklin once wrote. Franklin certainly knew what he was talking about. Our world has changed in many ways since.
Cisco Stock Deserves Investor Attention Many investors like tech stocks because of their ability to provide oversized capital gains. Indeed, as one of the fastest-growing segments of the stock market, technology has produced plenty of soaring tickers. Still, not every.
Is Tallgrass Energy LP’s Yield Safe? Low interest rates have squeezed incomes for retirees. And based on the outlook of many economists, those yields will likely remain meager for many years to come. One solution: “Oil Pension Checks.” My colleague.
EPR Properties: Monthly Dividend Stock Now Yields 6% If you want to earn a passive income stream from the stock market, few companies can do a better job than EPR Properties (NYSE:EPR). The company not only pays generous dividends with.
Bill Gates Quietly Buying This Top Dividend Stock; Here’s Why Bill Gates has access to an unlimited number of investment opportunities. With a phone call, the tech billionaire can get in on the ground floor of any Silicon Valley startup..
TCPC Stock: Consider This High-Yield Stock As a risk-averse income investor, I always approach double-digit yielders with caution. The reason is simple: when most blue-chip companies can’t even pay you four percent, what makes you think that a 10% yield.
Time to Check Out Target Stock In an era where the retail industry is living in the shadow of e-commerce, who would have thought that a century-old department store retailer can have a surging share price? But it is happening..
This Energy Stock Offers a Jaw-Dropping Payout In this day and age, a lot of people like to go after the soaring tickers. But if you are an income investor, the beaten-down section of the stock market could be worth.