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.
New Stock Buyback Program Won’t Affect Pinnacle’s Debt Leverage Profile On Monday August 15, Pinnacle Entertainment Inc. (NASDAQ:PNK) announced that its board of directors has approved a new $50.0 million share repurchase program. The company plans to fund the stock.
Board Approves $300 Million in New Purchase Buffalo Wild Wings, Inc. (NASDAQ:BWLD), announced today that its board of directors approved an increase to its share buyback program for an additional $300 million of the company’s common stock. According to the.
New Program Replaces Remaining Balance of Its 2014 Stock Buyback Program On Tuesday, August 16, Wolverine World Wide, Inc. (NYSE:WWW) announced that its board of directors has approved a new four-year share repurchase program. The program authorizes up to $300.
World’s Largest Miner Hurt by $7.7 Billion in Impairment Losses HP Billiton Ltd., (NYSE:BHP), the world’s number one miner by market value, cut its final dividend by 77% after posting its worst-ever annual loss. The group reported an underlying attributable.
Revenue Up 45% Year-Over-Year On Monday, August 15, Sylogist Ltd. (CVE:SYZ) announced that its board of directors has approved a quarterly dividend of $0.07 cents per share. This represents a 7.7% increase from its current quarterly payout of $0.065 cents.
U.S. REITs Are Now Overvalued Real estate investment trusts, or REITs, have long been a go-to choice for some income investors. However, one of the major banks in the U.S. recently raised some red flags about the sector. In a.
Surge in Gold Prices Helping Miner to Cut Debt and Boost Cash In a latest sign that gold miners may boost returning cash to their shareholders, AngloGold Ashanti Ltd. (JSE:ANG), the world’s third-largest metal mining company, said it will consider.
Combining Direct Capital Repayment with Reverse Stock Split On Sunday, August 14, QIAGEN NV (NASDAQ:QGEN) announced its plan to return approximately $250 million to shareholders through a synthetic share repurchase proposal. It would combine a direct capital repayment with a.
Underlying Profit Drops 24% on Gold, Copper Prices Newcrest Mining Ltd. (ASX:NCM) said it will pay a final dividend of $0.075 a share for 2016 after reporting a 12% decline in its net earnings. The company said in an announcement.
Revenue Up 18% Year-Over-Year The economy in the U.K. might be facing uncertainty, but this British housing company is still raising its payout to dividend investors. On Monday, August 15, Bovis Homes Group plc (LON:BVS) announced an interim dividend of.