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.
Hedge Funds Buying This Dividend Stock Today’s chart shows our favorite place to find top dividend stocks: hedge fund activists. These shareholders earn big returns by shaking up tired businesses. They push for dividend hikes, spin off non-core assets, and.
Whitestone REIT Has a High Dividend Yield Far too often, income investors become attracted to a stock simply because it has a high dividend yield. But, as I always like to tell our readers, a high dividend yield is only.
Billionaires Bullish on Top Dividend Stock Today’s chart highlights where elite investors can find a top dividend stock: trophy assets. Trophy assets make up the highest-quality, one-of-a-kind properties; think of the best land or the best buildings. These assets always.
A Top Dividend Stock for 2027 Today’s chart highlights what I consider a top dividend stock for the next 10 years: Cisco Systems, Inc. (NASDAQ:CSCO). Regular readers know we look for “picks and shovels” to profit from any trend. These.
“Trigger Event” Bullish for Apple Stock Today’s chart highlights the coming Donald Trump “trigger event” for Apple Inc. (NASDAQ:AAPL). In December, we told Income Investors subscribers to start buying cash-rich tech stocks. Readers have already earned double-digit profits, though we.
Stock Sales Tax Rate The goal of investing is to generate a profit by buying a stock at one price and selling at a higher price. Once both of these transactions take place, there will be a tax on the.
Big Yields from Renewable Energy I remember a story billionaire T. Boone Pickens once told about getting people to lease their land for wind turbines. Such deals can be lucrative. Utilities will pay you a big lump sum along with.
This Clean Energy Stock Gushes Income Today’s chart highlights one of my favorite places to scoop up yields of four, five, and even seven percent: clean energy stocks. I’m not talking about sexy startups like Tesla Inc (NASDAQ:TSLA). Rather, we’re.
Generally speaking, a high dividend yield often comes about after a particular stock has fallen in price. Every now and then, however, a company displays strong stock price momentum and a juicy dividend yield. These situations are especially interesting, because.
This Red Flag Could Cost You Thousands Today’s chart is a good reminder why you should use the “newspaper test” before buying any dividend stock. If you see a story jump from the business section to the front page of.