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.
AerCap Holdings N.V. Announces New Share Repurchase Program
AerCap Authorizes $250 Million in Stock Buybacks AerCap Holdings N.V. (NYSE: AER) announced on Monday that its board of directors has given the go-ahead for a new $250.0 million share repurchase program. The program will run through to December 31,.
First Connecticut Bancorp Inc Raises Dividend 14%
14% Hike in Quarterly Dividend Rate First Connecticut Bancorp, Inc.’s (NASDAQ:FBNK) board of directors has approved a quarterly dividend of $0.08 per share on Tuesday. This represents a 14.3% increase from the company’s current quarterly payout of $0.07 per share..
Is Walmart’s Status As a Dividend Aristocrat Under Threat?
Slowdown in Payouts Result of Fewer Shareholding Is Wal-Mart Stores, Inc.’s (NYSE:WMT) dominant position in the elite “dividend aristocrats” club of the S&P 500 under threat? After maintaining a track record of increasing dividend payouts each quarter for many decades,.
CF Industries Holdings, Inc. Upgraded by UBS
Price Target Raised to $28.00 Fertilizer producers can not only help grow crops, but also grow your investment income. One of them just got upgraded by a major financial firm. On Tuesday, UBS Group AG (NYSE:UBS) upgraded CF Industries Holdings,.
Corrections Corporation’s Dividend May Come Under Pressure
Prison Operator to Lose Government Contract Corrections Corporation of America (CCA)(NYSE: CXW) may face a cash flow crunch if it continues to pay dividends to its shareholders after the indication of reduced business from the Federal Bureau of Prisons (BOP).
Intuit Inc. Hikes Quarterly Dividend by 13%
Profits Climb on QuickBooks Sales Intuit Inc. (NASDAQ:INTU) has announced that its board of directors has approved a 13% increase in dividend payouts for the first quarter of fiscal 2017, as the provider of financial management solutions reported an earnings.
Tuniu Corporation Reports Earnings, Announces Share Repurchase Program
Travel Bookings Up 94.3% Year-Over-Year The online leisure travel industry has become huge in China, and one company just decided to reward shareholders with a $150.0-million stock buyback program. Tuniu Corporation (NASDAQ:TOUR) announced on, August 23 that the company’s board.
Best Buy Returns $309.0 Million to Shareholders in Buyback Plan
Retailer Second-Quarter Profit Beats Estimate Best Buy Co., Inc. (NYSE:BBY) said it returned $309.0 million to shareholders during the second quarter of the fiscal year 2017 as part of its $1.0-billion share buyback plan. In a statement to its shareholders,.
Kingspan Group PLC Hikes Dividends 25%
Kingspan Raises Interim Dividend Rate On Monday, Kingspan Group PLC (LON:KGP) announced its board of directors’ proposition of an interim dividend of $0.10 per share. This marks a 25% increase from last year’s interim dividend, which was $0.08 per share..
Search for Yield Propels Gains in Chinese Dividend Stocks
World’s Second-Biggest Economy Sees Stock Revival In an era of extremely low interest rates and negative bond yields, the shift from the safety of government bonds to dividend stocks is widespread and global. The latest addition in this search of.