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.
Will Driverless Cars Become a Catalyst for Intel Stock? As a legacy tech company, Intel Corporation (NASDAQ:INTC) stock doesn’t make headlines that often. But that doesn’t mean investors should ignore Intel stock. On the first trading day of 2017, the.
JPM Stock Benefits from a Strong Management Team JPMorgan Chase & Co. (NYSE:JPM) stock is trading at an all-time high. Since the recession in 2009, JPM stock is up 480%. Since the recession, JPMorgan has become a leaner and stronger.
This Could Be Huge for Apple Stock With a 10% climb, 2016 was not exactly a bad year for Apple Inc. (NASDAQ:AAPL) stock. However, compared to other hot tickers in the tech sector, Apple stock’s performance looked a bit lackluster..
Dividend Investing from a Unique Real Estate Company Dividend investing is a great method for generating income. Most of the time, the same large-cap companies come to mind, which is not the best thing for investors. That’s because the results.
This High-Dividend Stock Is a Solid Pick for Income Investors Even with rising interest rates, things are not that great for income investors. Everyone wants to boost the yield of their portfolio, but the choices are rather limited. Blue-chip stocks.
Ford Stock Surges 3.87% 2016 was quite a choppy year for Ford Motor Company (NYSE:F) stock. But on the first trading day of 2017, Ford stock surged as much as 3.87%. Let’s take a look at why. On January 3,.
Wells Fargo Stock Is Buffett’s Second-Largest Holding Remember when it looked like Wells Fargo & Co (NYSE:WFC) stock was losing its appeal due to the fake accounts scandal a few months ago? As it turns out, Wells Fargo stock was.
Two Reasons to Consider Costco Stock As an Investment Costco Wholesale Corporation (NASDAQ:COST) stock operates membership warehouses which offer discounted goods, making it a unique retailer. There are 723 Costco warehouses worldwide, including in the U.S., Canada, Puerto Rico, and.
Johnson & Johnson Stock Still a Dividend King Income investors are no strangers to Johnson & Johnson (NYSE:JNJ) stock. For decades, it has been providing increasing dividends to its shareholders. But now, when there are so many new companies with.
Phillips 66 Partners LP: 1 Top Dividend Stock Yielding 4.37% Regular readers of this column would know that I’m a big fan of master limited partnerships (MLPs). They can offer substantially higher dividends than regular stocks and can be great.