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.
Can You Count on This Payout? It’s tough finding decent yields nowadays. Bank certificates of deposit pay out next to nothing. Bonds yield only one or two percent. The situation has made retirement planning tougher than ever. A six-figure nest.
Little-Known Stock Provides Big Payouts Income investors are no strangers to the real estate sector. Thanks to a stable business model, real estate investment trusts (REITs) have a reputation of paying generous dividends. However, as investors searched for yields over.
Is This Payout Safe? Executives at NGL Energy Partners LP (NYSE:NGL) will be happy to put the past few years behind them. After expanding the company quickly for over a decade, an energy patch slowdown hammered its profits. That made.
A Not-So-Perfect High-Yield Stock In a market where the average S&P 500 company pays less than two percent, a double-digit dividend yield looks too good to be true. Therefore, it shouldn’t come as a surprise that most ultra-high yielders are.
1 Stock to Hold Forever Since the Passive Monthly Income newsletter debuted in August 2015, we have added 52 stocks to the portfolio. We sold 13 of those picks over the period, nine of which were for large capital gains..
A High-Yield Stock Most People Have Never Heard of Contrarian investing is not something we usually talk about here at Income Investors. The reason is that contrarian investors tend to go against prevailing market trends to exploit mispricings of stocks,.
Traits of Top Dividend Stocks Take a look at the chart below. It shows the returns of one of the most successful companies in the country. Since 1980, shares in this business generated a total return, including dividends, of 27,900%..
This Beaten-Down Stock Is Worth a Look The retail industry hasn’t been in the best of shape, but that did not stop GameStop Corp. (NYSE:GME) from mailing out oversized dividend checks to shareholders. And going forward, the company could provide.
Is This 8.3% Yield Safe? Today’s post highlights another winner from America’s booming oil patch. Longtime readers have heard our bull case on the energy sector before. New technologies have unlocked vast quantities of oil and gas, creating the need.
Check Out This Beaten-Down High Yielder In an era where most companies struggle to come up with a five-percent payout, a double-digit dividend yield may seem too good to be true. That’s why today, we’re going to take a look.