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.
This Double-Digit Yielder Deserves a Look Most people have never heard of Fidus Investment Corp (NASDAQ:FDUS). The company isn’t making the “next big thing,” and there doesn’t seem to be any catalyst that would cause FDUS stock to shoot through.
A Top Dividend Stock to Consider When the average S&P 500 company pays less than two percent, a 6.5%-yielding stock certainly deserves income investors’ attention. I’m talking about Tanger Factory Outlet Centers Inc. (NYSE:SKT), a real estate investment trust (REIT).
Dividend Stocks for Yield The stock market has soared lately, but you already knew that. Why it has soared is important. While you can point to many reasons, analysts credit most of the rally to hopes that the Federal Reserve.
Is It Possible to Earn a Double-Digit Yield? In today’s market, a small-cap stock with an ultra-high yield doesn’t really seem like the safest bet. But the blunt reality is, due to the market rally over the past decade, most.
Billionaire George Soros Is Quietly Buying This Top Dividend Stock You can make a lot of money riding the coattails of hedge funds. And right now, a deep-pocketed investor has quietly started accumulating shares in one top dividend stock. Billionaire.
Time to Check Out Costco Stock Despite not being a high-yield stock, Costco Wholesale Corporation (NASDAQ:COST) has served income investors well over the years. The reason is simple: any investor who held Costco stock for a few years is currently.
This Could Be an Opportunity for Yield Hunters In today’s market, many ultra-high yielders happen to be down-and-out stocks. This is especially true in the energy sector. Ever since the downturn in oil prices started a few years ago, investors.
Is This Payout Safe? Each spring, I write a big check to “Uncle Sam.” Wouldn’t it be nice to get a little bit of that money back? I know what you’re thinking: Rob, we pay the feds. It usually doesn’t.
An Overlooked Dividend Growth Opportunity When investors are searching for dividend growth stocks, they usually look for companies with decades of continuous dividend increases. The reason is simple: if a company manages to raise its payout every year through all.
Milk This “Cash Cow” for Yield You may have heard the phrase “cash cows” before, and for good reason; as a group, these stocks represent some of the most lucrative opportunities we’ve ever stumbled across. Put simply, cash cows constitute.