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.
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.
The financial crisis hammered bank stocks, but one company is still finding ways to reward shareholders. On Thursday, July 7, PNC Financial Services Group Inc (NYSE:PNC) declared a quarterly cash dividend of $0.55 per share. This represents an eight percent.
Kickstarter Breaks Unwritten Rule of Tech In an industry known for innovation, one company is going for the tried and true. In March, Kickstarter did something almost unheard of in the tech world: it paid a dividend to shareholders. According.
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As an income investor, you might not care much about insurance company Unum Group’s (NYSE:UNM) impressive climb in its stock price recently. But you should pay attention now, because the company just raised its dividend again. On Thursday, May 26,.
Brick-and-mortar retailers might not look that attractive today, but for income investors, there is a good reason to take a look at Lowe’s Companies, Inc. (NYSE:LOW). Why? It just hiked its dividend again. On May 27, Lowe’s announced a 25%.
As oil and gas companies took a huge hit, you’d expect that banks with exposure to the energy industry would also suffer. But that’s not the case for Canadian Imperial Bank of Commerce (NYSE:CM, TSE:CM). On Thursday, May 26, CIBC.
Tiffany & Co. (NYSE:TIF) had a lackluster quarter, but that did not prevent it from raising its dividend again. On May 26, Tiffany announced a 12.5% increase in its quarterly dividend to $0.45 per share. The company now has an.
Skeptics have long feared a slowing Canadian economy would crimp profits at Bank of Montreal (NYSE:BMO, TSE:BMO), but the country’s fourth-largest financial institution by assets once again proved the doubters wrong. On May 25, BMO reported financial results for the.