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.
CL Stock is One Stock to Consider Buying and Holding Income investors want three things from an investment: a steady income, low volatility to preserve the capital, and growth. And one company that meets all three requirements is Colgate-Palmolive Company.
Collect Rising Payouts from This Top Dividend Stock Today’s top dividend stock highlights a company that has raised its payout eight times in just two years, Rice Midstream Partners LP (NYSE:RMP). I know what you are thinking: Rice Midstream Partners.
Earn a Steady, High Dividend from This Advertising Giant One way to find dividend stocks with a high yield is by looking for those that have fallen in price but continue pay a dividend. Such stocks can be bought at.
UPS Stock Is Both a Growth and Income Investment Opportunity Whether you are a growth or income investor, United Parcel Service, Inc. (NYSE:UPS) stock may be of interest to you. A recent acquisition should lead to growth, especially with more.
MIC Stock is a Top Dividend-Paying Stock Today’s top dividend stock offers a high yield of 6.88% and has seen 14 straight quarters of hikes. One industry that sees a lot of local and international traffic is the airline sector..
1 Monthly Dividend Stock for Income Investors Readers of this column would know that I’m a big fan of monthly dividend stocks. With more frequent distributions, they are great for income investors who are relying on dividends to cover monthly.
Nike Stock Is a Top Pick for Income Investors Most large-cap stocks have equally large followings in the investment community, but sometimes a key player in an industry can get overlooked. Nike Inc (NYSE:NKE) stock is the perfect example. Nike.
SO Stock: A High-Dividend-Yielding Stock Offering 4.57% The hardest investments to find are high-dividend-yield growth stocks in which the dividend is also safe. One reason for an unsafe dividend is the sector the business is in being prone to changes.
Income Investors Should Take a Hard Look at BAC Stock Bank of America Corp (NYSE:BAC) stock is one that I believe investors should not ignore. By investing in BAC stock, you will gain exposure to the heavily regulated financial industry,.
Ranchers Earn $10,000 Per Turbine Per Year The Childers family struggled to work their farm in Nolan County, Texas for generations, until a landman knocked on the door a few years ago. The local utility company thought their dusty fields.