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.
Shares Surge After Energy Provider’s Cost-Saving Measures New York, NY — Williams Companies Inc (NYSE:WMB) said it plans to cut its dividend by 69% starting with the current quarter to help fund its plans to reinvest about $1.3 billion into.
Fuel Supplier Benefits from Both Margin, Volumes New York, NY — Macquarie Infrastructure Corp (NYSE:MIC) raised its quarterly dividend by 12.6% to $1.25 per common share as the energy supplier benefited from increases in both volume and margin on fuel.
Saputo Profits Increase 29% You might not have heard of Saputo Inc. (TSE:SAP), but you’ll likely have seen “Cracker Barrel,” “Dairyland,” “Frigo Cheese Heads,” and “Neilson” branded dairy products at the grocery store. Yep, they all come from Saputo. The.
Delivers $0.25 Payout for 4th Quarter New York, NY — Energizer Holdings Inc (NYSE:ENR) announced that its board of directors has declared a dividend for the fourth quarter of its fiscal 2016 of $0.25 per share. In addition, the board.
Strong Construction Season Brightens Outlook New York, NY — NiSource Inc. (NYSE:NI) expects between four to six percent annual growth in its dividend payout following a strong start to the construction season and as the company returns to profitability in.
New York, NY — Real estate investment trusts (REITs) can be solid picks for income investors and one of them just hiked its dividend again. On August 1, the board of directors of General Growth Properties Inc (NYSE:GGP) declared a.
Merger with P&G Beauty Segment Helping New York, NY — Coty Inc (NYSE:COTY) announced today its board of directors has approved a 10% increase in the company’s annual dividend to $0.275 from $0.25 per share on its Class A and.
Business Diversification Helping Automotive Group New York, NY — Penske Automotive Group, Inc. (NYSE:PAG), an international transportation services company, has approved an increase in the cash dividend to $0.28 per share for the second quarter of 2016 from $0.27 per.
Loans, Interest Income Fuels Growth New York, NY — MBT Financial Corp. (NASDAQ:MBTF), the parent company of Monroe Bank & Trust, said it will pay a dividend of $0.04 per share, representing a 33.3% jump when compared to the dividend.
If you love cheesecake, you can collect some handsome dividends by putting your money where you mouth is, without putting on any weight. On Wednesday, July 27, Cheesecake Factory Inc (NASDAQ:CAKE) declared a quarterly cash dividend of $0.24 per share..