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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Hercules Capital Stock: 10.05%-Yielder Up 19.6% Over Past Year
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Seanergy Maritime Stock: 10.48%-Yielder Up 86.7% Over a Year
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Sabine Royalty Trust: Outlook Bullish for 9.5%-Yielder Despite Industry Headwinds
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VOC Energy Trust Stock: Shares of 15%-Yielder Up 15% Over Last Month
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Monroe Capital Corp: 12%-Yielder Up 22% in 2024
Monroe Capital Stock Trading at Record Levels Even in a lower interest rate environment, the outlook for business development companies (BDCs) like Monroe Capital Corp (NASDAQ:MRCC) remains solid. Interest rates are coming down, but they’re still expected to remain well.
Outlook for Undervalued 15.7%-Yielding Diana Shipping Stock Robust
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