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.
REIT Raises Dividend 8.4% New York, NY — Economic recovery might be slow in Las Vegas, but one casino resort-focused real estate investment trust (REIT) is hiking dividends just a few months after its initial public offering (IPO). On Thursday,.
Revenue Surge Comes From Affiliate, Advertising Segments New York, NY — Twenty-First Century Fox Inc (NASDAQ:FOXA) raised its annual dividend by $0.06 a share and added $3.0 billion to its stock-buyback effort as it posted a stronger-than-expected earnings report for.
This MLP Now Yields Almost 9% New York, NY — Master limited partnerships, or MLPs, can be great picks for income investors. This one happens to be increasing its distribution every single quarter since its initial public offering (IPO). On.
Board Approves 6th Consecutive Dividend Increase New York, NY — Isn’t it nice that a company providing you with flavors and fragrances can also provide growing dividends? On Wednesday, International Flavors & Fragrances Inc (NYSE:IFF) announced that its board of.
Rio Tinto Earnings Plunge 47% New York, NY — Rio Tinto plc (ADR) (NYSE:RIO), the iron-ore giant, cut its interim dividend by 58% as it reported its worst first-half underlying earnings in 12 years amid weak commodity prices. Rio Tinto.
Net Income Surges and Data Sales Double New York, NY — Intercontinental Exchange Inc (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, announced today that its board has approved a $1.0-dollar.
Main Street Announces Dividend Increase New York, NY — Main Street Capital Corporation (NYSE:MAIN) announced that its board of directors declared a three percent increase in its quarterly dividend to $0.555 per share for the fourth quarter of 2016. Main.
Office Supplier Embarks on New Strategy New York, NY — Office Depot Inc (NASDAQ:ODP), a leading global provider of office products, services, and solutions, said it plans to start paying a quarterly dividend and close an additional 300 stores. Office.
North American Dairy Sales Offsetting Global Decline New York, NY — Saputo Inc. (TSE:SAP), one of Canada’s largest dairy producers, reported on Tuesday a 30% jump in net earnings and boosted its quarterly dividend by 11%. For Saputo’s fiscal 2017.
Potash Producer Struggling Amid Weak Demand New York, NY — Mosaic Co (NYSE:MOS) may revisit its dividend policy if the global potash market doesn’t improve. Mosaic’s CEO said the company has no plans to cut dividends but may have to.