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.
7% Increase in Quarterly Dividend Rate All financial information is in Canadian dollars. New York, NY — Flight simulators sound like fun. But did you know that a company making flight simulators can provide exciting dividends as well? On Wednesday,.
Analyst Worried About “Ballooning Debt” New York, NY—In today’s ultra-low interest rate environment, high-yield dividend stocks look like attractive opportunities to income investors. However, one analyst is warning that the dividend of a high-yield oil company might be at risk..
Moody’s Says Weak Financial Strength Doesn’t Justify Dividend New York, NY —Viacom Inc. (NASDAQ: VIAB) needs to cut its dividend and improve its credit metrics to avoid a cut to its credit rating, Moody’s Investors Service said, changing its outlook.
Company Benefits from Improved Real-Estate Market New York, NY — Investors Title Company (NASDAQ:ITIC) said today that it is increasing its quarterly dividend payout by 25% to $0.20 per share from $0.16 a share as the low-interest-rate environment increased real.
Bank Holding Company Announces 8.3% Dividend Hike New York, NY—In recent years, many bank holding companies have raised their dividends. This time, it’s SunTrust Banks, Inc. (NYSE: STI). On Tuesday, August 9, SunTrust Banks announced that its board of directors.
Energy Producer Posts $0.61 a Share Loss New York, NY — NRG Energy Inc (NYSE:NRG) reported today that it will pay $0.03 a share quarterly dividend, drastically lower from $0.14 a share it distributed in the same period a year.
16.7% Increase in Quarterly Dividend Rate New York, NY—On Tuesday August 9, Atrion Corporation (NASDAQ:ATRI) announced that its board of directors has approved a quarterly dividend of $1.05 per share. This represents a 16.7% increase from its.
10% Increase in Quarterly Dividend Rate New York, NY — Information services companies might not sound that exciting, but this one has been increasing its dividend every single year since its initial public offering (IPO). On Tuesday, August 9, Broadridge.
Energy Technology Maker Reports Second-Quarter Loss New York, NY — Babcock & Wilcox Enterprises, Inc. (NYSE:BW) said its board has authorized a $100 million share buyback plan as the company reports a $1.25 generally accepted accounting principles (GAAP) loss per.
Small, Mid-Cap Energy Firms Lead in Dividend Cuts New York, NY — Dividend cuts over the 12-month period ending June 2016 rose 157%, led by energy companies, according to an analysis by S&P Dow Jones Indices. The amount in slashed.