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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FAT Brands Inc Stock: Rare 21%-Yielding Restaurant Play
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8%-Yielding USA Compression Partners Stock Trading Near Record Levels
USAC Stock Bullish on Industry Tailwinds There’s more to the energy sector than oil. Natural gas deserves your attention, too. Most investors tend not to pay much attention to natural gas, aside from BBQ season, of course. But, it’s the.
TFSL Stock: A Simple Business (with an Inflation-Crushing Dividend)
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Nordic American Announces 110th Consecutive Dividend An income pick that I think deserves the spotlight today is Nordic American Tankers Ltd (NYSE:NAT). While oil prices continue to take a hit on concerns about global economic growth, demand for oil and.
SFL Corporation: Could 13%-Yielding Stock Soar 100%?
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CC Stock: “Fallen Angel” Offering a Robust Dividend
Chemours Offers Income Investors Best of Both Worlds A market sell-off, like the one we witnessed in between February and early April of this year, could be a gold mine for income investors. When fear takes over and investors rush.
Could 21%-Yielding ORC Stock Soar 38%?
Orchid Island Capital Pays Monthly Dividends Today, we’re going to take a look at ORC stock. The early April stock market sell-off put a lot of great stocks in an even better trading range. The “Liberation Day” crash kicked a.
GES Stock: Combining Style with Inflation-Crushing Dividend Income
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LyondellBasell Industries NV: 80% Upside for 10%-Yielding S&P 500 Stock?
14 Straight Years of Rising Dividends Historically, April is one of the best months for the stock market. Since 1945, it has rewarded investors with an average return of 1.6%. This year though, it’s a different matter, with economic uncertainty.
