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.
Income investors were unimpressed when Kinder Morgan Inc (NYSE:KMI) cut its dividends last December. But now, there is a new deal that could boost the pipeline giant’s ability to restore its dividends. On Sunday, July 10, Kinder Morgan announced that.
New York, NY — Convenience stores may not be the most exciting business in the world, but they have been a lucrative investment for shareholders. On Monday, Alimentation Couche-Tard Inc (TSE:ATD.B) declared a payout of $0.0775 per share, to be.
Utilities have a reputation for being stodgy investments that generate reliable income—but not much excitement. Duke Energy Corp (NYSE:DUK) stockholders might beg to differ. On Monday, the southeastern utility declared a quarterly cash dividend of $0.855 per share. The move.
New York, NY — For the fifth year in a row, Alimentation Couche-Tard Inc (TSE:ATD.B) has elected to hike its dividend to shareholders. On Monday, the company declared a payout of $0.0775 per share, to be paid on August 4.
Investors have soured on European stocks after the recent U.K. Brexit referendum, but one company is doing its best to impress investors. On Wednesday, Aviva Plc (NYSE:AV) announced plans to raise its dividend payout ratio to 50% by the end.
Utility companies can be great picks for income investors and a recent dividend hike from a company based in Eastern Canada just proved that point again. On Friday, Emera Inc (TSE:EMA) announced that its board of directors has approved a.
The energy industry is deep in the doldrums, but one company is still providing exciting returns to income investors. On Thursday, July 7, Enterprise Products Partners L.P. (NYSE:EPD) announced an increase in its quarterly payout to $0.40 per common unit,.
The railroad transportation industry has had its boom, but more recently, it’s been facing some headwinds. However, one railroad car manufacturer just raised its payout to income investors. In its earnings release on July 6, Greenbrier Companies Inc (NYSE:GBX) announced.
In an industry considered by most to be dull and boring, one company is producing exciting returns. On Thursday, payroll software company Paychex, Inc. (NASDAQ:PAYX) announced a $0.04 increase in the company’s quarterly dividend to $0.46 per share. The move.
While many oil patch firms are still deep in the doldrums, one energy partnership is increasing its already-impressive payout to income investors. On Thursday, July 7, Genesis Energy, L.P. (NYSE:GEL) announced a quarterly distribution of $0.69 per common unit for.