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.
An Australian REIT With a 4.55% Yield Dividend growth has flattened in many industries, but this Australian real estate investment trust (REIT) is still promising a sizable increase in its next year’s distribution. On Thursday, Arena REIT No. 1 (ASX:ARF).
Parent of Philip Morris Sees Better Profit in 2016 Altria Group, Inc. (NYSE:MO) today said its board has approved to increase the regular quarterly dividend payout by eight percent to $0.61 per common share from $0.565 per common share for.
Board Authorizes Stock Buybacks Up to $100 Million On Thursday, Vista Outdoor Inc. (NYSE:VSTO) announced that it had received approved for a new stock buyback program. Under the program, Vista Outdoor would be able to repurchase up to $100 million.
Shares Plunge After Discount Retailer Misses Forecast Dollar General Corporation (NYSE:DG), a Goodlettsville, Tennessee-based discount retailer, has announced that the company’s board of directors has approved an additional $1.0 billion being used for the company’s share repurchase plan in 2016.
Success Stemming from Recent Expansion Southwest Georgia Financial Corporation (NYSEMKT:SGB), the parent company of Southwest Georgia Bank, has announced that its board of directors has approved a 10% increase in its quarterly cash dividend. The shareholders of the common stock.
Seller of Nuts Says it Has Generated Record Cash John B. Sanfilippo & Son, Inc. (NASDAQ:JBSS) may declare a special dividend in the second quarter of 2017 as the seller of nut and dried fruits said its cash position strengthened..
15% Potential Upside in This Hotel REIT Host Hotels and Resorts, Inc. (NYSE:HST) stock has climbed quite a bit in recent months. In fact, one analyst is saying that investors of this lodging real estate investment trust (REIT) are about.
Materials Compnay Outlines New Capital Allocation Strategy Construction materials companies might not sound that exciting, but when one of them is combining dividends with aggressive buybacks, it deserves the attention of income investors. On Wednesday, Simpson Manufacturing Co., Inc. (NYSE:SSD).
Shares Surge to Three-Year High After Earnings WPP plc (NASDAQ:WPPGY), a multinational advertising and public relations firm, said its board has approved a 22% increase in the company’s dividend payout for the first half of 2016 after it posted a.
Announces 15% Increase in Interim Dividend Rate On Wednesday, Costain Group PLC (LON:COST) announced that its board of directors has declared an interim dividend of 4.3 pence per share. This represents a 15% increase from its previous interim dividend of.