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.
The GEO Group Inc.’s Distribution Keeps Growing If you want to make more money in the stock market, it pays to invest in “hated” industries. At least, that’s according to the findings of one study by a pair of professors.
1 High-Yield Stock to Think About Despite income hunters’ enthusiasm toward high-yield stocks, the blunt reality is that in this day and age, most double-digit yielders are not the safest bets. So whenever an ultra-high yielder’s payout gets a bit.
Don’t Bet Against Nike Inc When it comes to dividend yields, the best things sometimes come in small packages. Consider Nike Inc (NYSE:NKE). Over the past decade, NKE stock’s yield has averaged just two percent—not enough to interest most income.
Looking to Earn Monthly Income From Stocks? Read This Remember when Wall Street wasn’t so keen on real estate investment trusts (REITs) about a year ago? Well, that’s when investors should really have done their own analysis instead of following.
David Tepper Pouring Millions Into This Top Dividend Stock David Tepper has made a living buying hated stocks. The billionaire investor founded Appaloosa Management in 1993. Over the following decades, Tepper delivered double-digit annual returns for his clients by buying.
1 High-Yield Stock to Think About Finding high-yield stocks is easy. All you need is to use any of the stock screeners available on the Internet, and you’ll instantly see companies paying investors seven, eight, and even 10%. The difficult.
Realty Income Corp Hikes Dividend Another 3% One of the advantages of dividend investing is that it’s predictable. Technology investors have a tough time projecting which companies will even exist in a few years. Income investors, in contrast, can often.
A Stable Business With Little Competition When it comes to providing investors with a steadily increasing stream of income, few businesses can do a better job than this “legal monopoly.” I’m talking about Brookfield Infrastructure Partners L.P. (NYSE:BIP), a company.
Can You Count on This 12.8% Yield? In an era when the average S&P 500 company pays less than two percent, a yield of over 10% simply seems too good to be true. But investors shouldn’t just ignore double-digit yielders.
Magellan Midstream Partners, L.P. Hikes Distribution I coined the acronym “ROCK” to describe businesses with Recurring revenues, Outstanding margins, Capital-light operations, and a Kingpin position. Those features allow ROCK companies to generate gargantuan free cash flow and pay out growing.