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.
TD Stock Is a Must-Own for Dividend Investors
Why Dividend Investors Should Consider This Bank Stock Dividend investors are not strangers to the financial services industry. But while there are plenty of American banks paying handsome dividends, investors shouldn’t ignore this solid company north of the border. I’m.
Why General Motors Company Is a Timely Stock for Dividend Investors
I’m always on the lookout for solid dividend stocks showing some price weakness. General Motors Company (NYSE:GM) stock, for example, is down about six percent over just the past five days, while the Dow has essentially remained flat. Now a.
Here’s Why Pfizer Inc. is Still a Great Pick for Income Investors
Pfizer Inc. (NYSE:PFE) stock is down about 16% over the past six months, while the Dow has seen an eight-percent gain over the same period. Uncertainty over some of the drug giant’s key franchises, as well as President Trump’s future.
GILD Stock Is a Top Dividend Stock
GILD Stock Benefits from a Strong Administration Gilead Sciences, Inc. (NASDAQ:GILD) stock is a research-based biopharmaceutical company. Gilead focuses on the production and sale of medicines in such areas as liver diseases, human immunodeficiency virus (HIV), and hepatitis C. For.
3 Reasons to Be Bullish on Costco Stock
Costco Stock Is a Unique, Rewarding Retailer Costco Wholesale Corporation (NASDAQ:COST) stock is another that investors shouldn’t just brush off. Costco is located in the retail segment of the market. But while investors may think that it’s best to avoid.
Here Is Why Dividend Growth Investors Should Consider KMB Stock
KMB Stock Rewards Shareholders Kimberly Clark Corp (NYSE:KMB) stock has been in business for more than a hundred years. With its global presence, can KMB stock be owned forever? When it comes to owning a company forever and being a.
The Only Reason Investors Need to Own JNJ Stock
Why Income Investors Should Own JNJ Stock For decades, Johnson & Johnson (NYSE:JNJ) stock has been a staple in many income investors’ portfolios. While there are plenty of companies with great growth prospects in the market right now, I believe.
Here Are the Top 10 Holdings in Donald Trump’s Stock Portfolio
Donald Trump Stocks to Own President Donald Trump is known for many things. He ran a huge real estate business, hosted and produced the reality TV show The Apprentice, and had a net worth north of $3.0 billion. Now, he.
Here’s Why HD Stock Is Still a Solid Dividend Play
I usually tend to shy away from blue-chip momentum stocks. Home Depot Inc (NYSE:HD) stock, for example, is up a solid 13% over just the past three months against the Dow’s nine-percent return over the same period. Of course, when.
Why United Parcel Service, Inc. Might Be a Top Pick for Dividend Investors
Buying stocks at their 52-week highs is always a tricky proposition. Heading into the new year, for example, United Parcel Service, Inc. (NYSE:UPS) stock had some lofty expectations baked into it after steadily rising 19% in 2016 and seeing its.
