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.
“Alternative Banks” Make for Great High-Yield Stocks Income hunters searching for high-yield stocks should give this quiet industry a second look: “alternative banks.” My colleague Jing Pan coined the term to describe the growing industry officially known as mortgage real.
This Is a Top Dividend Stock to Consider Despite being a century-old business, Kimberly Clark Corp (NYSE:KMB) remains an investor favorite. Year-to-date, the stock is up more than 20%. And based on the latest news from the company, KMB stock.
Time to Check Out This Ultra-High Yielder As a conservative income investor, I don’t usually feel the need to watch a particular stock in earnings season. If a company has the ability to consistently raise its dividend—which is what I.
“Warren Buffett Test” Identifies Top Dividend Stocks Warren Buffett offers some simple advice for investors looking to spot top dividend stocks: bet on the jockey. In considering a business acquisition, Buffett looks hard at the quality of the company’s management..
Looking to Earn Oversized Yields? Read This If I tell you there’s a stock that offers a safe and growing yield of 9.1%, would you be interested? Of course you would. In a market where most companies can’t even pay.
Enbridge Inc Gushing Dividends This might sound odd, but I avoid most high-yield stocks. Their payouts look great—at least at first. But after digging into the financials, I realize it’s just a matter of time until these dividends get slashed..
Verizon Stock Returning Cash to Investors Compared to the solid gains in the overall market in recent months, things look rather uneventful at Verizon Communications Inc. (NYSE:VZ) stock. So far into 2019, Verizon stock is up just 1.2%. To put.
Hershey Stock Up 54% in 11 Months, More Upside Ahead The official slogan of Wall Street could be “Out with the old, in with the new.” Investors always look forward, seeking out firms with innovative, game-changing products or exposure to.
This Overlooked Stock Pays Oversized Dividends If sheer dividend yield is what you are looking for, then few companies can do a better job than FS KKR Capital Corp (NYSE:FSK). Never heard of this company? You are not alone. FS.
The Best Dividend Play in Tech? Frankly, tech is not known as the best sector for risk-averse income investors. Volatility is the norm and double-digit swings in share prices are not uncommon. Even a company as solid as Intel Corporation.