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.
Granite is Now Offering a High Yield of 5.14% One powerful method of generating high rates of return on invested capital is by investing in dividend growth companies with rock-solid businesses. Why, you may ask? Well, for one, there is.
Earn a 12.3% Yield from This Monthly Dividend Stock To see why this monthly dividend stock is special, let’s do some quick math. If you invest $100,000 into 10-year U.S. Treasury notes right now, you would be earning a return.
Don’t Underestimate the Value of Macy’s Inc I like solid companies with down-and-out share prices. A low stock price could not only represent value, but also allow a company’s dividend yield to rise. Macy’s Inc (NYSE:M) stock is a great.
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1 Top Dividend Stock for 2017 and Beyond When it comes to helping income investors achieve their goals, few have done a better job than Johnson & Johnson (NYSE:JNJ) stock. The key here is dividend growth. As consumers, we have.
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Best Warren Buffett Retirement Stocks At Income Investors, we are big fans of legendary investor Warren Buffett. We recently looked at Warren Buffett’s investing guide and his best-performing stock picks. Today, we are going to take an in-depth look at.
High Dividend Yield from a Unique Business Starwood Property Trust, Inc. (NYSE:STWD) is today’s topic, a real estate investment trust engaged in real estate financing. The company offers a an annual dividend yield of 8.72%–4.5 times higher than the average.
Big Yields from Little-Known “Oil Royalties” The Waddel Ranch has long been a collection of dusty storage tanks and oil derricks. The owners painted “NOT IN USE” across the panel of a rusted pump jack. Only a few dry weeds .
People often ask me what I emphasize more when searching for a high dividend yield stock, growth or value? In other words, would I rather invest in a company that is growing, or one whose stock is cheap? But as.