Dividend Stocks
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.
BlackRock TCP Capital Corp: The Best 10% Yielder on the Market?
If You Want to Earn a Double-Digit Yield, Read This In today’s market, the No. 1 reason to consider a double-digit yielder is obviously to collect its oversized dividends. On the flip side, the main reason for investors to stay.
A Simple Formula for Spotting Top Dividend Stocks
Top Dividend Stocks Share These Common Traits What are the traits of top dividend stocks? When I ask this question at conferences, audiences will throw out a bunch of answers. You’ll hear responses like innovative products, great management teams, and.
Northrop Grumman Corporation: A Dividend Stock with Major Upside Ahead?
This Dividend Stock Offers More Than a Dividend If an income investor wants to earn more than just dividends, then they should seriously consider adding Northrop Grumman Corporation (NYSE:NOC) to their watchlist. As a defense contractor, Northrop Grumman isn’t really.
Buckeye Partners, L.P.: An Upgraded 8.9% Payout
Can You Really Trust Buckeye Partners, L.P.’s 8.9% Yield? Readers ask why I would ever pick a stock that recently cut its dividend. After all, executives hate reducing their payouts. So by and large, lower distributions usually signal a big.
This Monthly Dividend Stock Yields 7.8%
Monthly Dividend Stock Profits From the Economy’s “Sweet Spot” If you want to earn more interest income, then you need to consider investing in the “sweet spot” of the U.S. economy. As regular readers know, I’m a big fan of.
DCP Midstream LP: Can a 9.5% Yield Possibly Be Safe?
Should Investors Consider This High-Yield Stock? Today’s article highlights one of the most generous dividend-payers in the current stock market, DCP Midstream LP (NYSE:DCP). Unless you follow the energy industry very closely, the name “DCP Midstream” won’t sound familiar. The.
Exxon Stock: One Dividend Payer to Own Forever
Exxon Stock Has Paid Dividends Since 1882 What do firms like Colgate-Palmolive Company (NYSE:CL), Consolidated Edison, Inc. (NYSE:ED), and The Coca-Cola Co (NYSE:KO) all have in common? In short, all three stocks have paid out dividends for over 100 years..
This Indicator Says Colgate-Palmolive Company Could Be an Opportunity
This “Boring” Business Deserves Investor Attention As an income investor with a long-term horizon, I don’t usually discuss a stock’s move in the short term. But let’s be honest here, income investors like capital gains as much as the next.
Texas Instruments Incorporated: Insiders Buying This Top Dividend Stock
Insiders Are Buying Texas Instruments Stock: Here’s Why In business, I like managers that put their money where their mouth is. Executives always talk up a big game. After spending more than a decade in the research business, you start.
What Walgreens Boots Alliance Inc Earnings Could Mean for Dividend Investors
Time to Check Out WBA Stock If you are a value investor, then Walgreens Boots Alliance Inc (NASDAQ:WBA) stock deserves your attention. The company runs one of the biggest pharmacy chain businesses in the world. And yet despite its “blue.
