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.
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.
Unit’s Spin-Off Holding Back Repurchases MetLife Inc. (NYSE:MET) may resume its share buyback plan in the next two months, according to RBC Capital Markets analysts Eric Berg . RBC Capital Markets analysts previously believed that buybacks would be on hold.
Del Taco Doubles Buyback Authorization On Tuesday, Del Taco Restaurants, Inc.’s (NASDAQ:TACO) board of directors has increased the company’s share and warrant repurchase program to $50.0 million, representing a 100% increase from its previously announced authorization of $25.0 million, effective.
Also Announces a $336 Million Share Repurchase Program After more than seven years of dividend drought, this airline company finally started returning value to income investors. On Wednesday, Qantas Airways Limited’s (ASX:QAN) board of directors declared a fully franked final.
P/E Ratios for Consumer Staples at Multi-Year Highs Investors who are buying solid dividend-paying stocks in search of a return when bond yields are extremely low are running into the risk of artificially inflating the value of companies. According to.