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.
U.K., Australia Suffer From Commodity Plunge Companies in Japan, North America, and Europe paid more dividends in the first quarter, pushing the Henderson Global Dividend Index to its highest level in a year. Dividend payouts by global firms rose 2.2%.
Raises Quarterly Dividend Rate to $0.42 Per Share In what’s considered a dull and boring industry, one company is producing exciting returns. On Monday, Martin Marietta Materials, Inc. (NYSE:MLM) announced that its board of directors has approved a quarterly cash.
Freight Mover Benefits From Capacity Management Cargojet Inc. (TSX:CJT), a Canadian-based air cargo service provider, said its board has approved a 17.4% increase in its cash dividend for the period starting July 1 to Sept. 30, according to a statement.
Current Price Too High to Justify: Analyst Williams Companies Inc (NYSE:WMB) has reportedly rejected a buyout offer from Enterprise Products Partners L.P. (NYSE:EPD). While reports suggest that Enterprise could make another offer, analysts are not so sure that this will.
S&P 500 Firms Offering Big Rewards Corporations are paying out more money to shareholders, but some analysts think the practice could be shortsighted. Large companies are distributing a larger percentage of their profits to shareholders, according to a recent report.
Payouts Exceed Incomes at Some Big U.S. Firms Investors involved with S&P 500 businesses had the best dividend party since the financial crisis of 2008 as some of the biggest companies in the U.S. paid more in dividend than their.
41 Consecutive Years of Dividend Hikes Utility companies are known as stodgy, boring investments, but shareholders of MGE Energy, Inc (NASDAQ:MGEE) don’t seem to be complaining. On Friday, MGE Energy, Inc. (NASDAQ: MGEE) board of directors approved a quarterly cash.
G&K Cash Flows Boosted By Recent Acquisition Just before being bought out, this uniform and facility services specialist decided to raise its payout to investors one more time. On Friday, G&K Services Inc (NASDAQ:GK) announced that its Board of Directors.
Authorizes Buyback of 500,000 Shares Over the Next 12 Months In the eyes of investors, IT companies might not be as hot as they used to be, but one of them is still returning value to shareholders through aggressive buybacks..
Brinker’s Yield Now Over 2.5% The restaurant business can be lucrative, as proven by a Dallas, Texas-based multinational restaurant chain having raised its dividend again. On Thursday, August 18, Brinker International, Inc. (NYSE:EAT) announced that its board of directors has.