Dividend Stocks
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.
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Digital Realty Trust Stock’s Dividends Raised for 19 Straight Years
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8%-Yield Omega Healthcare Investors Stock Has More Room to Run
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Plains All American Pipeline Stock: High-Yielder Reported Earnings Growth of 44%
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OFS Capital Stock: 13.5%-Yielder Hiked Q3 Payout 17%
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10.6%-Yielding Black Stone Minerals Stock Has 18% Upside
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7.4%-Yielding Antero Midstream Stock Up 15.3% to New High
AM Stock Delivers Capital Appreciation & Income The yield on the U.S. 10-year Treasury bond was recently five percent, which sent investors to the exits, seeking the lower risk of short-term cash equivalents. But there are still income alternatives to.
Golden Ocean Stock: 9.5%-Yielder Now World’s Largest Dry Bulk Shipper
Why GOGL Stock Has 71% Upside Thanks to a recently completed acquisition, Golden Ocean Group Ltd (NYSE:GOGL) is now the world’s largest publicly listed dry bulk shipping company. It recently reported high second-quarter earnings, renewed its share buyback program, and.