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.
Here’s Why F Stock Is Special For income investors, Ford Motor Company (NYSE:F) stock needs no introduction. In an era where the 10-year U.S. Treasury note is yielding a measly 1.6%, Ford stock’s 4.81% annual dividend yield looks quite attractive..
RY Stock Provides Solid Dividend Income If you have had enough of the roller-coaster ride that is U.S. banking stocks, and want to benefit from the resilience of the Canadian banking system, then consider investing in Royal Bank of Canada .
Pepsi Stock Dividend Increased 151% in the Past 10 Years In case you haven’t noticed, PepsiCo, Inc. (NYSE:PEP) stock is having a bull run. In the past 12 months, Pepsi stock is up more than 17%. Not bad for a.
1,598,284%: That’s how much Warren Buffett’s Berkshire Hathaway Inc.’s (NYSE:BRK.B) portfolio returned from 1965 to 2015. And if you think this kind of return can only be achieved from trading high-momentum tech stocks, you’d be wrong. As you look into.
PKG Surges 75% This Year on Profit Improvement Packaging Corporation of America (PCA) (NYSE:PKG) said today that it plans to increase the quarterly cash dividend by 15% as the company reported record second-quarter earnings. The quarterly cash dividend on its.
Wal-Mart Stock Has Great Potential on Internet Turnaround Income investors in Wal-Mart Stores, Inc. (NYSE:WMT) stock may have seen the worst of its performance after the company fell from grace last year after announcing its first-ever decline in sales. Investors.
New Business Model Turning Microsoft Stock into Dividend Machine Technology investors today seem to prefer Internet stocks to the decades-old Microsoft Corporation (NASDAQ:MSFT) stock. I mean, who cares about Microsoft stock—a $450.0 billion market cap behemoth—when there are Internet companies.
Nike Stock is Returning Value to Shareholders As an income investor, you probably haven’t paid that much attention to Nike, Inc. (NYSE:NKE) stock. With an annual dividend yield of 1.11%, Nike stock isn’t exactly the one you use to build.
General Motors Stock Now Yielding 4.8% Here’s a reason to like General Motors Company (NYSE:GM) stock: it’s the highest-yielding stock in Warren Buffett’s Berkshire Hathaway Inc. (NYSE:BRK.B) portfolio. Sure, Buffett’s position in General Motors stock is not as large as.
CVX Stock Emerging Better Than Peers From Oil Rout Chevron Corporation (NYSE:CVX), one of the highest-dividend-paying stocks in the Dow Jones Industrial Average Index of 30 companies, has shown a little sign of wavering in this commodity rout. Investors in.